22 Oct 2024

TARGET;-200

CURRET;-196.300

STOPLOSS;-194

  OVERVIEW

ü The GBP/JPY currency pair begins the week on a softer note, pulling back from its peak of approximately 196.00 reached on Friday, which marked its highest point since late July. Currently, spot prices are trading around the 194.70 level, remaining within a well-established range observed over the past two weeks, and showing a decline of just over 0.20% for the day.

ü The Japanese Yen (JPY) is demonstrating continued strength for the second consecutive day, driven by renewed concerns over potential market intervention. This development is significantly impacting the GBP/JPY cross. Japan's chief currency diplomat, Atsushi Mimura, has issued a warning against speculative trading, emphasizing that authorities are closely monitoring foreign exchange movements with heightened urgency. Additionally, Japan's Deputy Chief Cabinet Secretary, Kazuhiko Aoki, highlighted the importance of stable currency movements that accurately reflect economic fundamentals.

TECHNICAL ANALYSIS

ü  A decisive breakout above the top of the triangle would activate the pattern’s first upside target at 199.59, the 61.8% Fibonacci extrapolation of the height of the triangle (at its widest point) higher. This is the usual TA method for forecasting such moves. 

ü  One bearish sign is that the Moving Average Divergence Convergence (MACD) momentum indicator has been diverging bearishly with price during the formation of the triangle. Whilst price has made a higher high, MACD has declined. This is a mildly bearish sign.