FXWIREPRO: NZD/JPY's More Bearish Scope 74.500 After Breach of Crucial Support 75.922

FXWIREPRO: NZD/JPY's More Bearish Scope 74.500 After Breach of Crucial Support 75.922 - Bets on Debit Put Spreads for Speculation

The pair declined soon after the formation of long legged doji at 77.718 levels, fell from the highs of 78.210 to the current 75.177 levels.

That's where it has struggled to hold onto the resistance at 76.690 levels (upper BB, 30th March close).

After dropping from this resistance, bears have managed to push back southwards for support at 75.922 which we've advised in our earlier posts.

It has now broken supports at 75.922 levels on a closing basis (yesterday's close at 75.026), you can observe the bearish price behaviour of this pair upon breach of these levels, it has cleared one more major support within a day at 75.052 levels.

RSI and Stochastic indicate that the selling momentum remains intact despite some minor spikes in between.

MACD on daily, signals new bearish environment is likely to establish as there is an attempt of bearish crossover is observed.

On monthly chart, even though prices have slightly jumped in last month but it has remained well below 7 & 21EMAs.

MACD signals bearish trend to prolong ahead.

Massive volumes on declining streak is conformity to the strong downtrend.

RSI has been converging downwards below 42 levels, subsequently, stochastic curves have reached oversold territory but there is signs of bullish crossover.

Hence, considering above technical indications we could foresee more dips upto the next support only at 75.058 levels and bears may even drag upto 74.500 levels again in the days to come.

Trade tips: Bear put spread

Spot ref: 75.177, NZDJPY 1W IVs are at around 15.62% (while articulating).

We wouldn't be surprised if it shows interim spikes, bears likely to drag again towards 74.500 levels sooner or later, hence in order to tackle this swings we reckon debit put spreads are best suitable as the IVs  and premiums are reasonable considering daily swings on technical charts.

So, here goes the strategy, Debit Put Spread = Go long 1M ATM -0.49 delta Put + Short 1W (1%) OTM Put with lower Strike Price with net delta should be at -0.40.

For a net debit bear put spread reduces the cost of trade by the premium collected (on the shorts of OTM put) and keeps option trader to participate in downward moves and any upswings in abrupt.

The material has been provided by InstaForex Company - www.instaforex.com