Bottom line: GBPJPY medium term outlook remains bearish against 139.75 resistance. The currency pair has managed to carve a lower high around 136.00 as bears prepare to push lower towards 124.00 levels at least.
Fundamental Outlook:
USDCHF has managed to rally by over 100 pips in the last 2 trading sessions touching 0.9467 levels yesterday. The return of a possible risk aversion helped US Dollar gain across major currencies. It might just be the beginning, as the US Dollar Index also managed to rally close to 96.40 mark.
COVID-19 infections continue to rise across the US and Asian Countries (India specifically as it crosses the 1 million mark). The worst affected states in the US, Florida and Texas might be considering partial lock downs from today. Global Equity Markets remain vulnerable for a steep decline going forward.
GBPJPY exchange rate remained flat around 134.60, as GBP failed to gain despite an improvement in the UK job market yesterday. Sterling also declined against the USD amidst rising US-China tensions and potential second wave of COVID-19 infections. The US Dollar might regain its dominance if risk assets sell off.
Technical Analysis:
GBPJPY remains in control of bears as they hold below 139.75 resistance and also carve a lower high around 136.00 levels. The currency remains poised to push lower towards 124.00 levels at least before finding some support again.
GBPJPY had dropped from 148.00 through 124.00 levels earlier as an impulse wave. Ideally, an impulse is followed by a corrective wave in the opposite direction. GBPJPY managed to carve a corrective rally towards 139.75 levels, which is also the fibonacci 0.618 retracement of the earlier drop.
Most traders might have initiated fresh short positions since 139.00 levels, with a protective stop above 143.00 mark. The projected targets might be seen towards 129.00/130.00 at least if not towards 124.00 levels going forward. Only a break above 142.90 would change the structure.
Prepared by
Harsh Japee, Technical Analyst.
GBPJPY Chart
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