GBPJPY, Weekly
The pair has been ranging between 175 support and 179.29 resistance over the last three weeks. At the same time Stochastic oscillator has moved to oversold territory and is trying to move higher indicating the downside momentum is weak and might be reversing. This is consistent with the pair being close to support. Additionally, the sideways move has caused the lower Bollinger Bands to draw closer to the current price action and the weekly price bar lows have been moving along the 1.5 Standard deviations Bollinger Band. Until two weeks ago the 50 week moving average has been able to send price significantly higher but now this market fluctuates on both sides of the average. This suggests that the market is less decisive than previously toughing these price levels.
GBPJPY, Daily
Since March 18th GBPJPY has been moving lower in a bearish channel with the March consolidation between 178.80 and 180.08 resisting attempts to move higher. On Friday the pair reacted from the trendline and upper Bollinger Bands creating a shooting star candle. Today we’ve seen some follow through with bears pushing the pair below Friday’s low. This suggests momentum is currently to the downside.
Daily pivot candle high from April 14th coincides with the lower daily Bollinger Bands and could slow the moves lower (at 176.40). Stochastics and RSI are not at overbought levels but they are at levels where they turned lower the last time, and that’s when price turned lower as well. Oscillators do not determine where the price moves to but in context that price is reacting lower from a descending channel top it supports the general idea of price potentially moving lower.
GBPJPY, 240
In the intraday chart GBPJPY can be seen moving below the rising trendline that supported price since April 14th. Price has since corrected lower and after bouncing from 38.2% Fibonacci level is now at the time fighting with a resistance just below the 23.6% Fibonacci level. At the time of writing the latest 4h candle just closed above 177.50 and we now have a hammer candle that indicates lack of downside momentum and suggests traders should choose carefully where to initiate short trades. Next support and resistance levels are at 176.55 (lower Bollinger Bands and a resistance turned into a support) and 178.20, a recent 4h pivot high.
Conclusion
The long term chart draws my attention to the nearby support level but also 50 week moving average and indecisive price action around it. Should price move lower from current levels buyers could be stepping in close to the recent (April 14th) low at 174.88 and if we see confirming price action then we could see a move to the descending trendline in the weekly picture. In a shorter term picture I am following minor time frames (60 min and lower) to see if price action confirms the bearish indications given by the daily time frame shooting star candle that occurs near channel top. At the time of writing this seems to be the case as price has reacted lower from a 50 period MA in an hourly chart but with the 4h hammer candle this market does give slightly mixed signals. With a bearish daily setup it makes sense to sell rallies at resistances if price action confirms the analysis. A 4h hammer candle indicates lack of downside momentum and suggests traders should choose carefully where to initiate short trades.
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Janne Muta
Chief Market Analyst
HotForex
Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.