he pair has failed miserably below 155.00 after going to as
high as 153.87. The subsequent strong gains gains after the sharp fall again
failed near 152.00. Not only that but for the past 3 weeks the highs have been
getting lower.
GBP/JPY Weekly Chart
Where would the pair go? Well, if we wish to trade for
GBP/JPY (which we are doing), we will rather look at USD/JPY before trading for
GBP/JPY. It is not GBP getting weaker. It is rather USD getting scared to cross
the big psychological level of 100 against JPY.
USD/JPY has been failing just below 100 and that is quite
natural considering such a long bearish trend much below 100. The break of 100
will be a big thing and that pressure is getting reflected in GBP/JPY.
USD/JPY is already forming a double top pattern. We would
expect support near 22-day EMA i.e. 98.00 and with any failure of that a strong
support near 97.40. In case that support fail then 96.00/95.80 should be the
next target. In case such a move takes place then we are talking in terms of 135 pips to 200 pips range. But if such a
move takes place in USD/JPY then a possible move towards 145.20 or even 142.90
cannot be ignored for GBP/JPY and hence we are talking in terms of over 500 to
700 pips from tthe current level.
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