GBP Technical Analysis

• "Whereas continued Yen weakness was once a predominant expectation for the Bank of Japan, those prospects are looking much less likely after the December BoJ meeting. And in the case of the British Pound, we spent much of last year waiting for the end of the year for the inflation picture for the Bank of England to ‘come into better focus.’ Well, Super Thursday threw that wrench for a loop after the Bank took a decidedly dovish stance towards future rate hikes."
• "So we’ve seen a near complete reversal of fortunes. Sterling strength and Yen weakness are no longer looking that likely, and many traders are expecting the exact opposite."
• "All of this is fine and well, but it’s the chart that shows traders what matters most. And up until mid-December, there was still reason to keep on believing that the up-trend would return to GBPJPY. We looked at an aggressive top-side reversal setup two weeks ago based around this premise. At the time, GBPJPY had just run down to a six-year trendline that just happened to be confluent with the major psychological level of 180.00. There was also a Fibonacci level 20 pips below that batch of support that was the 76.4% retracement of the 2015 range in GBPJPY."
• "This is a great example of risk management at work. By eating a quick stop as soon as the trader knows that they’re wrong, they’re then free to embark upon new trends and fresh setups. Too many traders hold onto positions to simply prove that they were ‘right’ at some point in the past."

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Weekly price started the secondary correction within the primary bullish market condition in the beginning of December last year: price broke key levels from above to below and came to be very close to the key reversal support level breaking Ichimoku cloud together with Senkou Span line which is the virtual border between the primary bearish and the primary bullish trend on the chart. The price is ranging within the following key s/r levels

• 2.3073 key resistance level located near and above Ichimoku cloud in the beginning of the primary bullish area of the chart, and
• 2.1498 key support level located below Ichimoku cloud in the beginning of the primary bearish area.

Absolute Strength indicator is estimating the ranging bearish condition, and Chinkou Span line is located to be below the price for the breakdown to be continuing.

If the price will break 2.1498 support level on close bar so the reversal of the price movement from the primary bullish to the primary bearish market condition will be started.
If the price will break 2.3073 resistance level on close bar so the bullish trend will be continuing.
If not so the price will be on ranging within the levels.

• Recommendation for long: watch close close price to break 2.3073 for possible buy trade
• Recommendation to go short: watch close price to break 2.1498 support level for possible sell trade
• Trading Summary: correction to bearish reversal

Resistance	Support
2.3073	2.1498
2.5872	2.0005

SUMMARY : breakdown

TREND : weekly bearish reversal

• "With Japan having recently moved into ‘negative rates’ territory combined with the growing sentiment around an increased possibility of a Brexit, and with a Bank of England meeting on the docket for this Thursday, the potential for heightened volatility remains. And in GBP/JPY, that means any trader taking a position should take notice."
• "In the near-term, the top-side momentum is notable. We’ve basically seen 500 pips of run since Thursday’s close. That’s not something you want to directly fade unless you have a really strong resistance level to trade it off of, which I don’t. Not yet anyways. There’s a major psychological level at 175, a 50% Fibonacci retracement of the most recent major move at 176.37, and a 61.8% Fibonacci retracement of the secondary move in the pair at 178.03 (taking the 2008 high to the 2011 low). But there hasn’t been much signs of slowdown in this move higher yet, and there are no indications of resistance setting in."
• Daily price is located below 100 ay SMA and below 200 day SMA for the primaery bearish market conition. The price is on bear market rally to be bounced from 163.96 support level to be going to 175.01 resistance as the local short term target.

• If the price will break 180.04 resistance level so the reversal of the price movement from the primary bearish to the primary bullish trend will be started with the secondary ranging.
• If price will break 163.96 support so the bearish trend will be continuing.
• If not so the price will be ranging within the levels.

Resistance	Support
175.01	163.96
180.04	N/A

• Recommendation to go short: watch the price to break 163.96 support level for possible sell trade
• Recommendation to go long: watch the price to break 180.04 resistance level for possible buy trade
• Trading Summary: ranging

SUMMARY : secondary rally within the primary bearish condition

TREND : possible bullish reversal


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GBP/USD: ranging within bullish levels. The pair is located to be below 100 period SMA (100-SMA) and below 200 period SMA (200-SMA) for the primary bearish market condition for the ranging within the following key levels:

• 1.4600 psy resistance level, and
• 1.3800 psy support level.

The price is trying to break 1.3877 key support from above to below on close daily bar for the bearish trend to be continuing with 1.3800 psy support level as the next bearish target.

• if the price breaks 1.4600 psy resistance level on close daily bar so the local uptrend as the bear market rally will be started with the good possibility to the bullish reversal from 1.4800 level to be broken;
• if the price breaks 1.3800 psy support level so the bearish trend will be continuing;
• if not so the price will be moved within the channel for the ranging bearish.

Resistance	Support
1.4600	1.3800
1.4800	N/A

• GBP/JPY Technical Strategy: Flat, short setup available.
• GBP/JPY remains massively volatile. If you want conservative trade setups, you may be best served in another pairing.

It’s been a volatile few months for GBP/JPY, which is usually the case given the pair’s traditionally erratic nature; but when combined with major macro-economic issues for both represented economies, it’s been like a perfect storm of volatility. On the GBP side, we have the prospects of a Brexit, which, regardless of the way the vote turns, it’s difficult to imagine many positives to be had from the next four months while the topic is widely debated in the media. And on the JPY side, we have the recent move to negative rates which has introduced a brute force of distortion across capital markets. What should’ve led to Yen weakness led to Yen strength, and quite a bit of it. While the Bank of Japan moved as if they were trying to deflect capital flows, it actually appears to have increased risk aversion around-the-world.

The current level of interest is the 160.00 psychological level that price action resisted off of earlier today. This level had given support just three weeks ago when price action was burning lower, and such ‘rounded’ levels will often offer new resistance at old support in the case of a down-trend.

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H4 price is on bearish market condition located to be below Ichimoku cloud with the ranging within 1.3828 resistance level and 1.3723 support level.

If H4 price will break 1.3723 support level on close H4 bar so the primary bearish will be continuing.
If H4 price will break 1.3828 resistance level so the local uptrend as the secondary rally will be started within the primary bearish market condition.
If not so the price will be ranging within the levels.

• Recommendation for long: watch close H4 price to break 1.3828 for possible buy trade
• Recommendation to go short: watch H4 price to break 1.3723 support level for possible sell trade
• Trading Summary: ranging bearish

SUMMARY : bearish

TREND : ranging

D1 price is on primary bearish located below 200 period SMA and 100 period SMA with ranging market condition:

• The price is ranging between 1.8507 key support and 1.9046 key resistance levels
• Descending triangle price pattern was formed for the price to be crossed for the bearish trend to be continuing.

Most likely scenario: the price will break 1.8507 key support level to below for the bearish market condition to be continuing.

W1 price is located between 200 period SMA and 100 period SMA for the ranging market condition within the following key reversal support/resistance levels:

• 2.0418 resistance level located above 100 SMA/200 SMA area in the primary bullish area of the chart, and
• 1.7926 support level located near 200 SMA on the border between the primary bearish and the primary bullish area.

Trend:

• D1 - ranging bearish
• W1 - ranging
• MN1 - correction

W1 price is breaking 100 period SMA to below to be located between 100/200 SMA ranging area with Fibo support level at 2.0624 as the next target for the bearish reversal.

If the price will break Fibo support level at 2.0624 so the bearish reversal will be started.
If the price will break 38.2% Fibo resistance level at 2.2369 from below to above so the primary bullish trend will be continuing with good possible breakout of the price movement.
If not so the price will be ranging within the level.

Trend:

• W1 - ranging

GBP/USD
Monthly

-Recent price action formed a ‘tweezer bottom’ candlestick formation. This is a reversal pattern. The fact that the pattern formed amid the chaos of headlines (sentiment extreme on ‘BREXIT’) and at a confluence of trendlines indicates increased risk for a decent sized bounce. General focus is higher, probably until the low 1.50s. A crash could then take place into early 2017, based on a 96 month (8 year) cycle low count.

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