GBP/JPY, EUR/JPY Forecast: Technical Levels to Consider - JPY Price Outlook
EUR /JPY & GBP/JPY Technical Outlook
Weaker Japanese Yen
On Wednesday, EUR/JPY surged to its highest level in nearly five weeks at 121.15 then retreated after. Yet, the weekly candlestick closed in the green with 1.3% gain. Similarly, GBP/JPY rallied to nearly three weeks high at 134.78 then closed the weekly candlestick with 4.1% gain.
This week, the Relative Strength Index (RSI) dropped from 50 to 37 on EURJPY signaling the start of downtrend move. On the other hand, the oscillator remained flat below 50 highlighting a paused downtrend move.
EUR/JPY Daily PRice CHART (Oct 30 , 2018 – April 4, 2020) Zoomed Out
EUR/JPY Daily Price CHART (Jan 12 – April4, 2020) Zoomed in
Looking at the daily chart, we noticed that on Jan 24 EUR/JPY broke below the uptrend line originated from the Sep 3 low at 115.86, then started a down trend move led the price in March 9 to 116.12- its lowest level in six months (see the chart zoomed out).
On March 12, the market corrected and created a higher low at 116.31then rallied after. Yet, On Monday, EURJPY declined then closed below the 50-day average. Additionally, the pair moved to a lower trading zone 116.45 -119.63 generating two bearish signals.
Thus, a close below the low end of the zone could encourage bears to press towards 113.22 . Further close below that level opens the door for more bearishness towards 111.14. Although, the weekly support levels underscored on the chart (zoomed in) should be kept in focus.
In turn, any failure in closing below the low end of the zone reflects bears reluctance. This could reverse the pair’s direction towards the high end of the zone. Further close above that level could extend the rally towards 121.48. Nevertheless, the daily resistance levels printed on the chart should be considered.
GBP/JPY Daily PRice CHART (NOv 20, 2018 – April 4, 2020) Zoomed Out
GBP/JPY Daily PRice CHART (Nov 12 – April 4, 2020) Zoomed In
From the daily chart, we noticed that on Feb 25 GBP/JPY broke below the uptrend line originated from the Oct 7 low at 130.43. On March 16, the pair rebounded from 124.03 - its lowest level in nearly three and half years. See the chart (zoomed out). Although, the price rallied after as some bears seemed to cover. Yesterday, the price moved to a lower trading zone 128.84 – 133.30.
Any close above the high end of the zone may send GBPJPY towards 137.83. Further close above that level could mean more bullishness towards 143.20. That said, the weekly resistance levels marked on the chart (zoomed in) should be watched closely.
On the flip-side, another close below the high end of the zone increases the likelihood for GBPJPY to fall towards the low end of the zone. Further close below that level may convince bears to lead the price towards 125.50. In that scenario, the weekly support level underlined on the chart would be worth monitoring.
Written By: Mahmoud Alkudsi
Please feel free to contact me on Twitter: @Malkudsi
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.