- GBP/JPY carves weekly opening range above key support ahead of BoE, BoJ
- Check out our 2Q projections in our Free DailyFX Trading Forecasts.
- Join Michael for Live Weekly Strategy Webinars on Mondays at 12:30GMT
Technical Outlook:GBPJPY is testing a big support zone this week at 138.56/83– a region defined by the 76.4% retracement of the 2017 range & the 200-day moving average and converges on basic trendline support extending off the 2016 low. Note that descending channel support of the yearly high also crosses this zone and further highlights the significance of threshold with the weekly opening range taking shape just above- Look for the break.
A breach above the 100-day moving average / channel resistance ~141.30/48 would be needed to shift the focus back to the long-side with such a scenario eyeing initial targets at the June open at 142.75. A move break of support shifts the focus to 136.62/80 where the 2017 low-day close converges on the 50% retracement of the late-2016 advance.
Notes: A closer look at price action highlights a clear weekly opening range between 138.55 – 140.90. Heading into the Bank of England (BoE) & Bank of Japan (BoJ) interest rate decisions, the focus will be on the break of this zone. I’ll favor long-scalps while within this range with a breach above 141.48 needed to validate a more significant recovery is underway. A quarter of the daily average true range (ATR) yields profit targets of 39-44 pips per scalp. Added caution is warranted heading into the interest rate releases with the events likely to fuel increased volatility in their respective crosses.
- A summary of IG Client Sentimentshows traders are net-long GBP/JPY- the ratio stands at +1.2 (54.4% of traders are long)- weak bearish reading
- Long positions are 15.4% lower than yesterday and 5.3% lower from last week
- Short positions are 24.2% lower than yesterday and 19.0% lower from last week
- Although broader sentiment continues point lower for the pair, it’s worth noting that the recent washout in short exposure and waning long interest does soften the short-bias. That said, the immediate decline remains vulnerable while price is above key support at 138.55.
See how shifts in GBP/JPY retail positioning are effecting market trends– Click here to learn more about IG Client Sentiment indicators!
Relevant Data Releases
Other Setups in Play:
- Dollar (DXY) Primed Ahead of FOMC: Levels to Know
- USD/CAD Freefalls into Critical Zone
- Strategy Webinar: USD Majors in Focus as FOMC Takes Center Stage
- Kiwi Rally Continues: Bullish Up-Trend Vulnerable Sub-7230
- ECB to Make-or-Break EURJPY – Watch This Range
– Written by Michael Boutros, Currency Strategist with DailyFX