We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
GBP/USD
Mixed
USD/JPY
Mixed
Gold
Bullish
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Bitcoin
Bearish
More View more
Real Time News
  • Commodities Update: As of 03:00, these are your best and worst performers based on the London trading schedule: Silver: 0.64% Gold: 0.34% Oil - US Crude: -0.84% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/YvrO2r6JzE
  • Forex Update: As of 03:00, these are your best and worst performers based on the London trading schedule: 🇯🇵JPY: 0.17% 🇨🇭CHF: 0.04% 🇪🇺EUR: -0.03% 🇨🇦CAD: -0.13% 🇦🇺AUD: -0.36% 🇳🇿NZD: -0.37% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/3NzfCsQ13V
  • LIVE NOW! Senior Currency Strategist @IlyaSpivak discusses the technical and fundamental $AUDUSD outlook for the week ahead here - https://www.dailyfx.com/webinars/378612179?CHID=9&QPID=917720&utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.90%, while traders in Germany 30 are at opposite extremes with 83.46%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/YAczEQdU5T
  • LIVE IN 30 MIN: Senior Currency Strategist @IlyaSpivak discusses the technical and fundamental $AUDUSD outlook for the week ahead here - https://www.dailyfx.com/webinars/378612179?CHID=9&QPID=917720&utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
  • Join @IlyaSpivak 's #webinar at 10:00 PM ET / 3:00 AM GMT to prepare for the week ahead in trading $AUDUSD Register here: https://t.co/sZNWPVRHA0 https://t.co/kYQsHkGUoV
  • Chinese Equities Following Tuesday Open: Shanghai Composite (-0.15%), CSI 300 (-0.25%) -BBG [delayed]
  • Asia Pacific Equities Update - China still closed: Nikkei 225 (-1.08%), KOSPI (-1.12%), ASX 200 (-0.20%), Hang Seng (-0.69%) -BBG [delayed]
  • My majors-based #Yen index is gaining with risk aversion pickup up pace in Asia trade as #Nikkei225 futures drop. Still, #JPY generally has more room to go before the broader technical bis shifts bullish from neutral. I am keeping an eye on Jan & Feb highs as that threshold https://t.co/NTWCrNiekf
  • RT @KyleR_IG: * #RBA: CORONAVIRUS A MATERIAL NEAR TERM RISK TO CHINA, TRADE * RBA: CUT COULD SPUR BORROWING AND STRONG UPSWING IN HOUSING *…
GBP/JPY Sideways Channel Provides Swing Trading Opportunity

GBP/JPY Sideways Channel Provides Swing Trading Opportunity

2011-02-25 17:56:00
Christopher Vecchio, CFA, Sr. Currency Strategist
Share:

The GBP/JPY pair has been trading in a choppy sideways channel for the better part of six months, carving out a nearly 1000-pip channel since August. After moving in what appeared to be a descending triangle since May, the GBP/JPY pair broke out to the upside, topping off just above 135.00, its highest level since mid-August. Now, with the broader markets moving towards a risk-off period once again on the heels of political instability in the Middle East, the Yen has once again gained favor for its safe haven status and appreciated against the majors (save the Swiss Franc, another safe haven currency) since the beginning of the turmoil. Going forward, with the GBP/JPY pair trading beneath its significant moving averages, while testing a key Fibonacci resistance level, there is room for swing traders to collect profits as the GBP/JPY pair remains within its six-month long sideways channel.

Levels to Watch:

-Range Top: 135.56 (Trend)

-Range Bottom: 125.68 (Trend)

GBPJPY_Sideways_Channel_Provides_Swing_Trading_Opportunity_body_Picture_1.png, GBP/JPY Sideways Channel Provides Swing Trading Opportunity

Charts created using Strategy Trader– Prepared by Christopher Vecchio

Suggested Strategy

  • Long: Place an entry at 131.66 (38.2 Fibo)
  • Stop: Set the stop to 130.47 (119-pip risk, 50.0 Fibo)
  • Target: The first target is 133.13 (23.6 Fibo, move up stop to 132.71(100-SMA)), second target is 133.85 (50-SMA Fibo)
  • Timeframe:5 to 10 days

Trading Tip The GBP/JPY pair has seen wide swings over the past six months, trading mostly sideways though the bias has been to the upside as the pair remains 500-pips above where it started the year, even after falling back 400-pips over the past 10 days. In fact, with an ATR of 130, there is significant room for traders to collect profits on the daily swings. The GBP/JPY pair is now in its leg-down from the range top, but is finding resistance at its channel regression; accordingly, while we expect the pair to continue to decline within the channel over the next few weeks and months, in the near-term, a rebound is expected as the SSI indicator is bullish, despite pulling back from recent extremes. On the 6-hour chart, the GBP/JPY pair is coming off of oversold levels on the RSI; the MACD Histogram differential is narrowing off of a bearish divergence, suggesting bullish momentum; and the Slow Stochastic oscillator is close to issuing a buy signal, with the %K equal to the %D.

Event Risk for the U.K. and Japan

Both the U.K. and Japan have market moving data coming out next week, though it will all be released at the beginning of the week. The data comes in two waves, so to speak: on Sunday and Monday, figures regarding retail trade and unemployment will be released for Japan, while on Tuesday a slew of British economic data regarding the housing sector and consumer credit will be revealed.

U.K. – The docket is empty until Tuesday for Britain, and although what is considered to be the most market moving data will not be released next week, enough significant data will be that could weigh on Pound-crosses. The housing sector is expected to show a continued decline in prices in February, as mortgage approvals are expected to have fallen in the trailing months. Furthermore, consumer credit and money supply data will be released, important figures considering the recent easing of expectations for a rate hike by the Bank of England.

Japan – Significant data releases for Japan are front-loaded next week, with all of the potentially market moving data coming out Sunday and Monday. Retail trade data, a measure of consumer spending, is due first, followed by household spending data and the unemployment rate on Monday.

Data for February 27 to March 4

Data for February 27 to March 4

Date

U.K. Economic Data

Date

Japan Economic Data

Mar 1

Nationwide House Prices (YoY) (FEB)

Feb 27

Retail Trade (YoY) (JAN)

Mar 1

Net Consumer Credit (JAN)

Feb 28

Household Spending (YoY) (JAN)

Mar 1

M4 Money Supply (YoY) (JAN)

Feb 28

Jobless Rate (JAN)

Written by Christopher Vecchio, DailyFX Research.

To contact the author of this report, please send inquiries to: research@dailyfx.com

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.