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GBPJPY Forecast and Trade Setup Update

GBPJPY Forecast and Trade Setup Update

Fundamental Analysis

The pound is trading under a slightly bearish pressure amid Brexit uncertainty and latest dovish BoE statement.

The BoE  ‘Super Thursday’ saw the central bank downgrade growth expectations for 2019 again, this time to 1.2% from 1.7% and trimming interest rate expectations to just one 0.25% hike by the end of 2020. The BoE based their lower growth forecast on weaker overseas economic activity and ‘the greater effects from Brexit uncertainties at home’.

On the other hand; the Irish backstop problem becomes seemingly even more entrenched.  Prime Minister May is now required to present a backup plan to Parliament by Monday.

The summary of the Brexit issue: May will need to decide what course to take in the coming months – either a Norway style model or a permanent customs union or relent to a second referendum – all of which should be positive for GBP. However, after winning her no-confidence vote, May made it clear that leaving with no deal cannot be ruled out. Although unlikely, if she does not ask for an extension, it could pave the way for a no-deal Brexit. GBP will crash, even if Parliament responds by taking control of Brexit negotiations. After that, Parliament is scheduled to debate and vote on Plan-B a week later on January 29.

On the other hand; JPY is getting demand as a safe haven asset. As we have mentioned in our previous JPY forecast, the IMF’s global growth projections suggest that Japan’s healthy growth may cause the Yen to shine in the future. 

Technical Analysis: 

Our latest short trade reached the first target. We booked some profit and moved our Stop Loss to entry.

Daily Chart: 

GBPJPY DAILY CHART

Dragon ended the week at 142.020, just below EMA 50 and in the lower Bollinger Band after rejecting MA 100 & MA 200. RSI headed south. 

On the H4 Chart, technical indicators turn to bearish. The price closed below EMA 50 and MA 100.

However, we can not talk about a trend reversal as long as Dragon holds above 140.600.

On the upside, 142.900 remains as the key resistance. The bearish pressure will continue as long as the price stays below 142.900. 

On the downside, 141.400 and 141.100 are the levels to focus on Monday. We keep our short position targeting 140.600. A clear breakout of 140.600 may send the price 139.800, 139.000 and 138.200 Fibo 88.6 Retracement.

Any emerging intraday opportunity will be published for the members.

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DISCLAIMER: This is a technical analysis study, not advice or recommendation to invest money

GBPJPY: Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. Chartreaderpro does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility

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