Bottom line: GBPJPY short term outlook turns bearish as long as prices stay below 140.00 mark. The projected rally from 124.00 lows has reached the target around 140.00 levels recently. Bears have regained control since then and could be poised to push prices lower.

Fundamental Outlook:

USDCHF bounced back sharply from intraday lows at 0.9380 as US Dollar gained across the board yesterday. The safe haven US Dollar gained traction as risk sentiment collapsed. The Dow Jones (-6.9%) and SPX500 (-5.9%) registered their worst single day drop since March 23, 2020. We have kept readers prepared for a dramatic collapse in Global Equity Markets since last several trading sessions and this could just be the beginning.

GBPJPY exchange rate has reversed lower since last 4 trading sessions from 139.74 levels. This was much expected and discussed earlier as the anti-risk Japanese Yen was set to gain. Furthermore, with risk assets reversing sharply yesterday, it has only added to the bearish sentiment in GBPJPY and USDJPY respectively.

Technical Analysis:

GBPJPY bulls managed to reach the projected targets around 139.00/140.00 levels and reversed sharply as expected. The currency has dropped close to 500 pips since reversing from 139.75 levels early this week, and is expected to continue further, going forward.

GBPJPY has dropped from 148.00 through 124.00 levels earlier. Please note that the rally since 124.00 lows has reached the fibonacci 0.618 retracement of the above drop at 138.87 already. Also note that the rally has been corrective A-B-C towards the above fibonacci retracement.

High probability remains for GBPJPY to resume lower again until prices stay below 143.00 levels going forward, which is fibonacci 0.786 retracement level of earlier drop. Traders might be prepared to sell on rallies, with protective stop at 143.00 and projected target below 124.00 respectively.

Prepared by

Harsh Japee, Technical Analyst.

GBPJPY Chart

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