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Bullish GBP/JPY on Correction Lower - Update

Bullish GBP/JPY on Correction Lower - Update

2017-11-07 09:00:00
Nick Cawley, Strategist
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** Update 2 **

We entered this trade at 148.10 on Thursday, October 5.

We hit the first target of 151.65 on Monday, November 1. Our second target at 157.80 remains in place.

We have moved our stop-loss up from 146.70 to 148.60 - Thursday/Friday low of w/e November 3.

Original piece September 20.

GBP/JPY has made a quadruple-top over the last week around the 151.50 level and needs an additional impulse to push it higher. Having rallied from 139.35 just under one-month ago, with the uptrend accelerating from Monday September 11, the market is still trying to find a new equilibrium. Looking at the stochastic indicator, the pair are in overbought territory – understandably after the recent surge higher – and the first Fibonacci retracement level kicks in at 148.70, just ahead of the 148.10 May 11 high.

Chart: GBPJPY Daily Timeframe (May 7 - September 20, 2017)

Bullish GBP/JPY on Correction Lower - Update

Chart by IG

And on the weekly chart, the 151.65 double bottom on April 4 and June 6 2016 also come into play, providing another level of resistance. The stochastic indicator also confirms the pair in overbought territory.

Chart: GBPJPY Weekly Timeframe (June 22, 2015 – September 20, 2017)

Bullish GBP/JPY on Correction Lower - Update

Chart by IG

While we remain bullish GBPJPY on a longer term basis, we look for the market to correct back to the 148.10/148.70 level before it retests the current resistance at 151.50/151.65 before pushing ahead to test the June 6 2016 high of 157.85.

Entry Point: 148.10 (May 11, 2017 high)

Target 1: 151.65 (Cluster of April 4 – June 6, 2016 lows/September 2017 quadruple tops)

Target 2: 157.80 (Just below June 6, 2016 high)

Stop-Loss: 146.70 (September 13, 2017 high)

--- Written by Nick Cawley, Analyst

To contact Nick, email him at nicholas.cawley@ig.com

Follow Nick on Twitter @nickcawley1

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

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