Bottom line: GBPJPY long term structure remains bullish against 124.00 lows print in March 2020. In the near term though, the currency has been rejected from 143.00 handle since the beginning of the month. Bears might be inclined to remain in control as long as 143.00 holds well.
Fundamental Outlook:
USDCHF had raised through 0.9200 mark early this week, up over 200 points after hitting lows at 0.8998 earlier. The exchange rate might be set to gain further as US Dollar is set to rise over the next few weeks. Further drop in global equity markets might help the safe haven US Dollar to rise against EURO, GBP, NZD and AUD.
GBPJPY extended its drop and closed at 135.89 levels, down by -1.5% yesterday. The exchange rate has dropped over 700 pips since September 01, 2020. Pound Sterling collapsed across the board yesterday over Brexit developments yet again.
The EU might not refrain from taking legal action, if UK Prime Minister Boris Johnson does not fulfill commitments within the Withdrawal Agreement. As this news crossed wires, GBPUSD reversed sharply from days’ high around 1.3035 and closed lower at 1.2801, down -1.5%.
Technical Analysis:
GBPJPY has been in control of bears and has dropped over 700 pips since the beginning of this month. The currency trades around 136.00/10 levels as we prepare to publish today’s update and might produce slight pullback rally before bears are back in control.
GBPJPY might find some support around current price action (135.90/136.00), since it is right at the fibonacci 0.618 retracement of the recent rally between 132.00 and 143.00 levels respectively. A bullish bounce here, might extend its gains through 143.00 over the next few trading sessions.
Alternately, a consistent push below 135.00, would open doors to test or break below 132.00 support over the next few days. It might be critical for GBPJPY bulls to hold above 132.00 mark, to keep the bullish structure intact, going forward.
Most traders might remain inclined to initiate fresh long positions as GBPJPY trades near fibonacci 0.618 support at 136.00 levels. The protective stops might be placed below 132.00 levels and projected targets towards resistance around 140.00/141.00 mark.
Prepared by
Harsh Japee, Technical Analyst.
GBPJPY Chart
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