GBP/JPY forecast for the week of July 18, 2016, Technical Analysis

The GBP/JPY pair broke higher during the course of the week, but gave back quite a bit gains on Friday which looks as a bit of a harbinger of either profit taking, or more bearish pressure eventually. I believe that an exhaustive candle on the weekly chart at a higher level could be sold, but quite frankly we may not get the opportunity and have sell off of the daily chart. I don’t really have any interest in buying this pair at the moment, and therefore I’m simply looking for selling opportunity one way or the other.

GBP/JPY Forecast July 15, 2016, Technical Analysis

The GBP/JPY pair broke higher during the day on Thursday, clearing the top of the previous gap. With this, I believe that a break above the top of the range for the session on Thursday is a very bullish sign and could very well send this market much higher. I realize that we pulled back a little bit during the course of the day, but having said that I think that we will find buyers given enough time. With this, I believe that this market could very well reach towards the 150 level, and perhaps much quicker than anticipated.

GBP/JPY Forecast July 14, 2016, Technical Analysis

The GBP/JPY pair fell slightly during the course of the session on Wednesday, as we found the top of the previous gap very resistive. However, I do think that we will probably find some type of support near the 135 level, and that could offer a nice buying opportunity. On a bounce or a supportive candle, I’m willing to go long. Am also willing to go long on a break above the top of the range from both the Tuesday and Wednesday session, as we could pick up serious steam due to the fact that there is “empty air” just above.

Technical Outlook: Important GBP Crosses

GBPUSD

With Theresa Mary May, the UK Home Secretary, heading to fade the political uncertainty in Britain after the present PM, David Cameron, announced his resignation during post-Brexit disappointment, the GBP surged again all of its counterparts. The GBPUSD, not being an exception, also bounced from 1.2850 and rallied to the highest in more than a week; however, short-term descending trend-line resistance, at 1.3330, might restrict its further upside and can trigger the pair’s renewed decline. At present, the Brexit-day lows around 1.3230 can provide adjacent support to the pair, breaking which 1.3110 and the 1.3050, followed by the 1.3000 psychological magnet, are likely consecutive supports that it could witness. Given the pair further dips below 1.3000, it becomes weaker enough to revisit the 61.8% FE of its June 24 crash, around 1.2850, and the 1.2800 support. Alternatively, a clear break above 1.3330 can quickly fuel the pair towards 1.3400 and the 1.3480-85 horizontal resistance-line, which if broken alleviate chances of its further run-up to 1.3650, comprising 23.6% Fibo level.

EURGBP

eurgbp

Even if the EURGBP reversed from 0.8290-95 horizontal support, 61.8% Fibonacci Retracement of its latest up-move, around 0.8365, near to the 0.8385 trend-line, might limit the pair’s further upside. Should the pair clears the 0.8385, the 0.8400 and the 50% Fibo level around 0.8420 may entertain the short-term Bulls, breaking which 0.8450 and the 38.2% Fibo level of 0.8470 can act as small barriers during its rise to 0.8490 – 0.8500 horizontal area. On the downside, 0.8320 and the 0.8295-90 might restrict the pair’s nearby decline, clearing which 0.8260 and the 0.8230 are likely consecutive supports to see on the chart. Moreover, pair’s further weakness below 0.8230 needs to confront with the crucial 0.8200 mark prior to expecting revisit of 0.8000 psychological magnet.

GBPJPY

gbpjpy

Alike GBPUSD, the GBPJPY also struggles to clear the horizontal resistance-area, around 139.40-60; however, the overbought RSI indicates fair chances of the pair’s pullback towards 137.00 immediate support. If the pair drops further below 137.00, 23.6% Fibonacci Retracement level at 136.00 and the 133.00 can come-back on the chart. Meanwhile, pair’s capacity to clear the 139.60 can activate its up-move to 38.2% Fibo level of 140.60 and then to 143.50. If the pair successfully trades above 143.50, it becomes capable enough to aim for 147.00 resistance level.

GBPCHF

gbpchf

While 100% FE of the GBPCHF’s November 2015 – April 2016 downside helped the pair’s bounce, a downward slanting RSI, coupled with inability to clear the 1.3200 mark favors the Bears’ return. Given the pair closes below 1.3030, it can quickly test the 1.2900 and the 1.2840 supports while its further decline below 1.2840 needs to confront with 1.2720 and the 1.2600 in order to re-test the 100% FE level around 1.2460. However, pair’s ability to surpass the 1.3200 can further support it to counter the 61.8% FE level of 1.3285, breaking which April month lows of 1.3415 and the trend-line support-turned-resistance of 1.3550 are likely numbers to observe for the pair traders.

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GBP/JPY Forecast July 13, 2016, Technical Analysis

The GBP/JPY pair broke higher during the course of the session on Tuesday, as we are now approaching the 140 level. If we can break above that area, that should be very bullish and as a result should send this market much higher. I believe at this point in time that pullbacks will be supported all the way down to the 135 level. If we break down below there, then it’s time to start selling again. However, there is a lot of fear that the Bank of Japan is going to intervene in the market somehow, and having said that it makes sense that we go higher for the short-term.

GBP/JPY Forecast July 12, 2016, Technical Analysis

The GBP/JPY pair broke higher during the course of the day on Monday, as it looks like we are trying to reach towards the 135 level. However, just above there I see quite a bit of resistance, so I think it is only a matter time before resistance comes into the market, but an exhaustive candle should attract sellers. On the other hand, if we can break above the 138 level, we could very well reach all the way to the 150 level as there’s a bit of a large amount of nothing between the resistance and the 150 handle.

GBP/JPY forecast for the week of July 11, 2016, Technical Analysis

The GBP/JPY pair broke down during the course of the week, making a fresh, new low. That being the case, the market looks as if it is ready to try to break down below the 130 handle, and this should send the market even lower. Any rally at this point in time should be a selling opportunity on signs of exhaustion. Keep in mind that this market is very sensitive to risk appetite, so having said that it will continue to follow the overall attitude of all things British.

GBP/JPY Forecast July 8, 2016, Technical Analysis

The GBP/JPY pair initially tried to rally during the course of the day on Friday, but ended up turning back around to form a bit of a shooting star. By doing so, it looks as if the market is going to continue to fall of it, but more than likely we will have to wait until we get the jobs number to see what the reaction will be. As this is a risk appetite oriented market, the better the number, the higher this market will go and of course vice versa. Ultimately though, I think rallies will invite selling at higher levels so I am still bearish overall.

GBP/JPY Forecast July 7, 2016, Technical Analysis

The GBP/JPY pair initially fell during the course of the day on Wednesday, but then turned right back around a bounce above the 130 level. Because of this, looks like we could get a little bit of a bounce as we will have to retest the 135 handle. With this, it’s very likely that the markets will continue to see bearish pressure in that area as we are most certainly in a downtrend, so this rally could be a nice selling opportunity. On the other hand, if we break down below the bottom of the hammer, the market should continue to go lower there as well.

GBP/JPY Forecast July 6, 2016, Technical Analysis

The GBP/JPY pair fell again during the day on Tuesday, breaking down to a fresh, new low. While this is a very strong sell signal, I’m not willing to do so at this point because I believe that it will be much safer to sell the GBP/USD pair. This is because the Bank of Japan has threatened to get into the markets again, and that of course could have them intervening. If that’s the case, we could see a massive turnaround in the value of this marketplace, but buying going to the GBP/USD pair, you have the ability to take advantage of the extreme weakness in the British pound.

GBP/JPY Forecast July 5, 2016, Technical Analysis

The GBP/JPY pair did almost nothing during the day on Monday, as we continue to bounce off of the 135 handle. Because of this, I believe that we will continue to consolidate in the quite frankly this is a market that I’m not interested in at the moment. If we break down below, it is possible that the Bank of Japan could get involved, but you would have to see a move below the 100 level in the USD/JPY pair in order for them to intervene in my opinion. With this, I believe that we probably will have a very quiet market today.

GBP/JPY Forecast July 4, 2016, Technical Analysis

The GBP/JPY pair fell slightly during the course of the session on Friday, as we continue to consolidate just above the 135 handle. If we can break down to a fresh, new low, I feel that the downtrend continues. Even if we rally from here, I believe that it’s only a matter of time before sellers come back in, and I will look at those rallies as an opportunity to sell this market from a higher level. Ultimately, I do think that we break down and reach towards the 130 level but it may take several attempts to slice through the support.

Second Wave of Selling Hits British Pound as Carney Warns of More Stimulus

The British Pound was the biggest loser for the second week in a row as investors continued to hit the Sterling over the uncertainty caused by last week’s vote by the U.K. to leave the European Union. The GBP/USD opened lower on Monday and never looked back, taking out the previous week’s low on a move to a 31-year low at 1.3117, before settling at 1.3267, down 0.0382 or -2.80%.

Some of the early selling pressure last week came from investors who had held on to the Sterling after the first wave of selling hit on June 25. They were hoping for some clarity following a week-end of contemplation after the Brexit vote. However, nothing happened that would alleviate political and economic uncertainty.

More uncertainly came about as talks of a Scottish referendum and potential Scottish block of the U.K. leave vote was seen as clouding the way forward. European officials also want to see the U.K. leave quickly to limit the disturbance to the Euro Zone.

Most European officials want Britain to invoke Article 50 to redefine its relationship with the EU but leaders of the leave campaign refused to act last week. It is being predicted that the longer the U.K. waits, the worse it will be for the Sterling.

Weekly GBPUSD
Sterling Drop-Off continues

Sellers took a breather about mid-week, allowing the British Pound to strengthen against the U.S. Dollar and Euro. Some investors said last week’s sell-off was overdone, while others were betting on central banks to rescue the global economy if needed with more stimulus.

The mid-week rally didn’t last very long as sellers reemerged after Bank of England chief Mark Carney warned that the central bank could enact further monetary easing as soon as August.

Weekly GBPJPY
Further Monetary Easing by Bank Of England?

Carney said the central bank would likely need to further ease monetary policy this summer, leading some to believe the BoE would cut rates this month at its next meeting. He also hinted that other stimulus measures would be considered aside from cutting rates.

Weekly EURGBP
Weekly Chart – EUR/GBP

Recently Carney ruled out negative rates which means the MPC will only have two 25 basis point cuts available, considering the rate currently stands at 0.50%. This implies that the bank may prefer to introduce unconventional measures, such as expanding the quantitative easing program.

Despite attempts to prop up the Sterling last week, it looks as if investors are finally coming to the realization that Brexit will happen, putting to rest speculation that political and economic maneuvering might prevent Parliament from following through on the vote. With Carney now talking about further easing in August, the Sterling is likely to continue to feel selling pressure.

GBP/JPY forecast for the week of July 4, 2016, Technical Analysis

The GBP/JPY pair had a slightly negative week, but as you can see it appears that we have support at the 135 handle. By forming a slight hammer, I believe that the buyers may return in order to play the bounce. A break of the top the hammer could be a buying opportunity but quite frankly I believe it simply more prudent to stand on the sidelines and wait for an exhaustive candle to sell. I don’t know that you will get the opportunity on the weekly chart though, you may have to drop down to the daily charts.

GBP/JPY Forecast July 1, 2016, Technical Analysis

The GBP/JPY pair fell slightly during the course of the day on Thursday, as we continue to test the 135 level for support. I am a seller of this pair every time it rallies on a short-term chart and show signs of exhaustion. I think sooner or later, we will break down and continue to go much lower so I have no interest whatsoever in buying this pair as the British pound continues to suffer against safety currencies such as the Yen and the Dollar. Ultimately, I think that the pair could go as low as 125 over the longer term.

GBP/JPY Forecast June 30, 2016, Technical Analysis

The GBP/JPY pair initially fell during the day on Wednesday, but found enough support to turn things around and form a bit of a hammer. We have essentially filled the gap, so now the question is whether or not the buyers can continue to find their way? At this point in time, I do think that a bounce could continue but there is so much in the way of negativity in this currency pair right now that I think that at the first signs of exhaustion, you have to be thinking about selling. It makes sense that we did bounce from here though, because of course the 135 level is a large, round, psychologically significant barrier.

GBP/JPY Forecast June 29, 2016, Technical Analysis

GBP/JPY  rose slightly during the course of the day as the 135 level offered support. This was a bit of a bounce, we are simply consolidating above the 135 level in order to build up enough momentum to break below, in my estimation. There is still  gap above that needs to be filled, so we could see buyers continue to press the issue. Ultimately though, I believe that GBP/JPY would be easier to sell on short-term rallies.

GBP/JPY Sentiment: Neutral/Bearish

GBP/JPY Forecast June 28, 2016, Technical Analysis

The GBP/JPY pair gapped lower at the open again on Monday, and it now looks as if the markets are going to continue to show bearish pressure due to the fact that there is so much in the way of headline risk when it comes to the British pound. With this, and the fact that this is a market that is highly sensitive to risk appetite, I still believe that short-term rallies and show signs of exhaustion might be the way to go, as it offers a selling opportunity. Obviously, a break down to a fresh, new low would also be a selling opportunity.

GBP/JPY forecast for the week of June 27, 2016, Technical Analysis

The GBP/JPY pair initially tried to rally during the course of the week, as there were several reports that perhaps the United Kingdom was going to vote to remain within the European Union. However, we get the exact opposite result on Friday and that of course caught the market off guard. The fact that we broke down below the bottom of the hammer from the previous week shows just how much selling pressure there is, and as a result we drifted all the way down to the 132.50 level. This is an area that caused quite a bit of a bounce, and there is speculation that the Bank of Japan may have gotten involved. The Swiss National Bank did after all, and that of course gives us an idea that perhaps the Japanese worked against the appreciation of the yen as well.

At this point though, it’s difficult to place longer-term trades unless they are to the downside. Ultimately though, you will probably have to look at daily charts in order to place that trade as the range from this past week is so large. In fact, we had a range of 15 handles for the week. Because of this, this is a very negative connotation to this range and of course the candle for the week. However, it’s difficult to place believe longer-term trades because there is going to be so much in the way of volatility. Ultimately, this market should continue to favor the downside, but the ability to trade off of a weekly chart would be pretty difficult. I think that short-term exhaustive candles will probably continue the longer-term downtrend, and as a result it’s likely that the sellers will use short-term charts in order to find the “value” in the Japanese yen from time to time. In the unlikely event that we broke above the top of the range for the week, at that point time you would have to assume that the market is going to go higher. A break above 164 of course is massively bullish, however unlikely.

GBP/JPY Forecast June 27, 2016, Technical Analysis

The GBP/JPY pair fell significantly during the course of the session on Friday, slicing through the 150 level. This of course has everything to do with the United Kingdom voting to leave the European Union. We did get a bit of a bounce, roughly 7 handles, by the end of the day and as a result it looks as if short-term exhaustive candles could be reason enough to start selling again. I have no interest in buying this pair right now, because quite frankly the British pound will continue to fall in value as we will reassess the New World.