GBPJPY Weekly Technical Outlook
Yen has been technically stronger than most of its peers since December 2018. The current risk sentiment, with the uncertainties surrounding Brexit negotiation, presents a favorable fundamental condition to be bearish on GBPJPY. Of course, we should be aware that market perception is key and the prevailing market direction should guide our trading. That being said, on a technical basis, GBPJPY continues to bear southward.
On the monthly time frame, a bearish drop from the high of July 2007 to the low of September 2011 was served a retracement around the 61.8 Fib zone in June 2015. The drop from that zone since June 2015 to the low of October 2016 entered the 32.8/50 Fib retracement zone in January 2018. Price action in February 2018 has turned southward from this Fib zone and we may expect further bearish move this month. The bearish candlestick formed in February 2018 traversed two horizontal support zones southward and technically stronger than the most recent preceding bullish candlesticks. Price action has also breached the monthly pivot southward.
On the weekly time frame, price action has been consolidating in an ascending pattern between an ascending trendline (red) from the low of January 2012 and another (navy) from the low of October 2016. Last week, price action broke below the support trendline (navy) and met a barrier at the horizontal support in the 144.810 area. Traders who include wave theory in their analyses are likely to see further southward impulsive wave. The technicals on the weekly time frame are synced in favour of bears and we may see them target the horizontal support around the 138.950 area.
On the H4 time frame, price action since late February 2018 has been primarily bearish and the order flow context has been much in favour of bears. A resistance trendline (magenta) is very much at play. However, bulls attempted to take price action northward in the latter part of last week Friday; by the early part of this week, they may push for a retracement to retest the trendline or the immediate minor horizontal resistance zone around 146.39/147.370. Such a move is much likely to be corrective. But it is important to remember that there is still a support trendline (navy) below, which was seen on the weekly time frame. Therefore, we may not see a sustained southward momentum until this support trendline is broken down by price action on a daily closing basis. A breakdown of the support trendline on a four-hourly closing basis is likely to require a retest before we can have confidence in a sustained southward momentum.
I may be wrong. Trade safe and prosper.