Bottom line: GBPJPY medium to long term outlook remains bullish against 124.00 lows in March 2020. Bulls have managed to push close to 143.00 levels before finding resistance. A break above 144.00 would be encouraging for further rally potentially through 148.00 mark.

 Fundamental Outlook:

USDCHF had pushed close to 0.9150 mark before pulling back yesterday. The exchange rate might be set to gain further as US Dollar continued its rally against EURO, GBP and others majors. The US Dollar Index (DXY) also managed to register above 93.00 mark.

The US and European indices tumbled during the New York session and Asian Markets might follow suit. Risk aversion might gain further traction over the next few weeks as geopolitical tensions between US and China keeps rising, the recent being China’s Chip Policy.

The upcoming US Presidential Election might add further to the volatility as Biden continues to lead Trump, marginally though. Safe haven US Dollar might be the only beneficiary if risk assets continue selloff.  Dow Jones closed -2.42%, SPX500 at -3.5%, DAX down -1.4% and FTSE was down -2.60%.

Technical Analysis:

GBPJPY bulls have remained in control and push through 142.75 mark, before pulling back. The currency had produced an evening star candlestick pattern on the daily chart, indicating a potential reversal. Only a break above 144.00/145.00 resistance might confirm a long term trend reversal.

GBPJPY had dropped from 148.00 through 124.00 levels earlier. Please note that the recent rally in the past few weeks has reached fibonacci 0.786 retracement of the above drop. High probability remains for at least a corrective drop towards 134.00/135.00 levels from here.

Alternately, if GBPJPY bulls manage to take out resistance at 145.00 handle, it would be further encouraging. They might target to push through 148.00 resistance in the next few weeks. It might be vital for prices to stay below 143.00 to keep the short term bearish structure intact.

Most trader might be willing to initiate fresh short positions around current price action (141.00), with a protective stop above 143.50 mark and projected target towards 134.00/135.00 in the next few weeks. A consistent push through 143.50 might threaten to push towards 145.00.

Prepared by

Harsh Japee, Technical Analyst.

GBPJPY Chart

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