GBP / JPY Technicals - Head and Shoulders pattern forming/formed

January 28, 2013

Daily Chart

Weakness in the rally of GBP/JPY seen? Streak of Higher Highs and Higher Lows have been broken, with prices in the process of forming the right shoulder of the Head and Shoulders pattern (marked by black labels). An alternate interpretation can be seen with the red labels, which suggest that the H&S pattern has already been formed. With current price trading just around the upward trendline, the red label H&S can be confirmed should price trade lower towards 140.0 neckline. For more conservative traders, the black H&S can only be confirmed when price drop below 140.0.

Stochastic indicator suggest that a top may be in place soon with readings approaching above 80.0. Fundamentally, GBP/JPY rally since 14th Nov is attributed to Yen’s weakness more than GBP strength. Last week was significant for GBP/JPY due to GBP’s weakening which is compounded with JPY’s strengthening following BOJ’s announcement. Currently Yen is weakening once more, placing doubts that current sell off, if any, could break 140.0 convincingly especially since price wasn’t able to break 140.0 even when Yen was strengthening temporarily.

Hourly Chart

Hourly Chart is also bearish with price breaking from the upward trendline. Support around 142 come in the form of consolidation zone formed between Jan 21st and 22nd. Stochastic indicator is also near 20.0 after price climbed down from 144.0, potentially entering the “Oversold” region when price hits 142.0, or perhaps even earlier around 143.0 depending on the pace of the drop. This scenario agrees with the fundamentals of Weak GBP and Weak JPY competing with one another which may cause the pair to be directionless until new catalyst is introduced in the mix.

Publication source
OANDA information  OANDA reviews

January 16, 2017
GBP under pressure ahead of May speech
A speech from Theresa May is one of the key events for financial markets this week and certainly the most relevant for the British pound. Primie Minister is about to deliver a speech on UK’s stance and conditions ahead of the triggering article 50 and beginning the Brexit negotiations...
January 13, 2017
Yellen (Fed) with a neutral message but USD starts to fight back
USD was taking damage from the Wednesday Donald Trump specch until yesterday evening. Lack of details on economic and fiscal agenda at the first press conference of the president-elect caused a correction on equities boosted since the US elections...
January 12, 2017
Are OPEC cuts going to be in vain?
As OPEC and its biggest partner Russia have agreed to curtail Oil output prices, this offers the strongest catalyst of recovery since the start of the fight for market share back in 2014. Despite the initial market “hurrah” which helped the prices to get over the $50 mark...

Tickmill Rating
Grand Capital Rating
OctaFX Rating
FXCM Rating
OANDA Rating
XM Rating

Binary Brokerz Rating
EZTrader Rating
Grand Option Rating
Anyoption Rating
OptionFair Rating
OptionRally Rating