Bottom line: GBPJPY medium term structure is bearish against 140.00 resistance. Bears might have carved yet another lower high around 136.60 as they prepare to push prices below 124.00 mark over the next several weeks.

 Fundamental Outlook:

USDCHF has been on the receiving end since July 16, 2020 and has dropped to fresh lows at 0.9238 today before pulling back. The US Dollar has lost against major currency pairs with risk sentiment on the rise lately. Traders might want to remain cautious though, as risk aversion returns.

SPX500 dropped over -1.25% closing in at 3235, Dow Jones down -1.3% closed at 26652 and NASDAQ crashed over -2.5%, closed at 10579. The initial jobless claims print over 1.4 million for the week ended July 17, higher than expected. This might just be the beginning of a larger selloff, we’ve been calling.

GBPJPY seems to have lost in the past 2 trading sessions. The exchange rate has dropped from 136.62 through 135.50 as we prepare to publish the update for the day. The anti-risk Japanese Yen has risen as Global Equity Markets collapsed yesterday. The currency might come under further pressure, going forward.

Technical Analysis:

GBPJPY seems to have managed to carve yet another potential resistance around 136.62 levels as expected and discussed earlier. Bears might be inclined to resume lower towards 124.00 lows and further, going forward.

GBPJPY had earlier dropped from 148.00 through 124.00 as an impulse wave. The drop was followed by a corrective rally towards 139.75 levels, as a normal market behavior. Since then, the currency has been looking to carve lower lows and lower highs targeting below 124.00

Also note that 139.75 was the fibonacci 0.618 retracement of the earlier drop. Bearish reversal remained high probability from there. Furthermore, please note that the recent corrective rally from 132.00 mark, also managed to terminate at the fibonacci 0.618 retracement of the drop between 139.75 and 132.00 respectively.

Traders might have initiated fresh short positions around 136.60, with protective stops above 140.00 levels and projected targets below 124.00 mark respectively. Only a break above 140.00 would change the above bearish structure.

Prepared by

Harsh Japee, Technical Analyst.

GBPJPY Chart

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