GBPJPY – Good times ahead, eyes 155.83-156.66

GBP/JPY cross is looking good on charts

Pair’s repeated rebound from KC support after having reached oversold status (as per RSI) indicates the recovery is likely to continue unless supp at 154.23 is violated in which case a fresh sell-off may happen.

Otherwise the cross looks set to test 155.83 – 156.66.

Trade recommendation – Play from long side in range of 155.20-155.4

Advertisements

EUR/USD update – further losses likely

EUR/USD fell as anticipated yesterday via a post here EUR/USD looks like a short trade now

Euro’s almost 100-pip drop today to near 1.13 lvl following back to back spinning top formations seen on the daily chart from April 1 indicates bears are to be in control at least till the spot drops to 1.1236-1.1220.

Break lower could yield 1.11-1.1088. On the other hand, rebound from 1.1236 if followed by a rise abv 1.1342 would shift risk in favor of a rise to 1.1460-1.15 levels.

EURUSD D1 (04-13-2016 1625).png

Nifty completes inverse head n shoulder as expected

Nifty forming an inverse head and shoulder was pointed out here Nifty update – inverted head and shoulder in progress

Accordingly, the index has taken out 7800 and is now eyeing 200-DMA level of 7875. That is also a larger falling trend line resistance.

The bird has jumped 1000 points since March 1, hence it will be interesting to see if prices manage to take out 7875 levels on closing basis, in which case doors would be opened for 8800 levels (inv h&S breakout target).

A rejection there followed by a drop below neckline would signal fresh sell-off to 7516 levels.

nifty.png

Dow – H&S formation on hourly, attempt shorts

Dow Hourly Chart

dow.png

Dow could possibly form a head and shoulder formation with neckline around 17,510 levels.

There is a bearish price-RSI divergence on the 4-hour chart, which adds to the odds of a move lower to 17,510. If breached it shall open doors for 23.6% Fibo level (from feb lows to Apr 2nd high) of 17,266 levels.

Thus, shorts could be build at current level of 17,720 with stop just above latest cyclical high of 17,811 and for target of 17,510 and 17,266 levels.

In case prices break above 17,811 shorts could be reversed into longs for Nov 3 high of 17,977

 

Brent – Rising channel, above 38.2% Fibo

brent oil.png

Brent oil is now at fresh 2016 high on hopes major producers will sign production freeze accord over the coming weekend. That shall still keep markets oversupplied by about 2 million barrels per day.

Still, prices are on the rise as output freeze accord would signal major powers are ready to come to common terms and may eventually end up cutting production.

Technicals – Rising channel

Rising channel is seen on the daily chart and given the a daily close abv $43.32 is not a done deal, the doors are open for a rebound from the same tomorrow/continuation of the rally to channel resistance at $46.54.

Buyers should take a note of the fact that on the hourly time frame RSI is forming lower highs while price is forming higher highs, indicating the move above $43.00 could be a bull trap. Caution is advised especially in positional trades.

Nifty option strategy – negligible loss unless IVs rise by leaps and bounds

If bears out there still expect Nifty to drop, lets say by 400 points or so by April expiry. Here is an interesting strategy to consider.

First and foremost, loss is bare minimum.

Strategy set up –

Short Nifty futures (Apr) @ 7740

Long Nifty 7500 Call (Apr) @ 250

Short Nifty 6800 Put (June expiry) @ 26.50

Here is the payoff chart

Screenshot_1.png

Chart – Myfno.in

Yellow line – pay off 10 days from now

Blue line – April expiry

With IVs at 17 on April expiry, there is negligible loss. 10 days from now we are in profit if market starts falling.

The only risk is IVs let say jump to 25 plus levels in which case on expiry the June PE option value will spike

 

Cable- bulls in control, April a good month

April has been a good month for Cable since 2005. Add to that a better than CPI and core CPI and there is little reason for bulls to stay on the sidelines.

Hourly chart

GBPUSD H1 (04-12-2016 1436).png

What we have is a sort of a inverse head n shoulder breakout that presents a technical target of 1.4559. however, the immediate hurdle is at 1.4330 for which longs could be build and beyond which the spot may rise to 1.4350-1.4406 levels.