Pounds-Yen | GBPJPY Forecast /Outook & Trading Strategies -ForexAbode

1. MACD:GBPJPY daily MACD line stays over the signal line and though the gap is still convincing but narrowed down a bit. 4-hourly MACD’s last crossover was going below the signal line sharply. It remains below it with convincing gap.

2. ADX: GBPJPY daily +DI line had crossed over -DI line sharply and the gap was widening. Recently the gap has narrowed sharply. ADX, which was well above 25 (touching 39) to indicate the strength of the bearish trend, has a bit below 25.

3. Ichimoku Cloud:Tenkan-sen had crossed over Kijun sen to give a weak bullish signal (you may please check our Ichimoku cloud page under technical analysis). The price had broken over the lower and upper edge of an extremely thin cloud but dropped strongly but found support just over the lower edge and managed to close for the week just over the upper edge.
 

Previous Outlook of GBPJPY:

“The price action during last week suggests that we can expect some more upward moves. On the upside now a break over the next resistance zone of 120.20 to 120.30 is critical. If GBPJPY breaks over this resistance zone then we can expect further move up towards 121.10. 121.10 would represent the Fibonacci 38.2% retracement of the downward move from October 30th, 2011to January 13th, 2012. A break of this should pave the way to a move towards 121.80. After 121.80 the currency pair will enter a very strong resistance area between 121.80 to 122.80. The movement in this zone is expected to be slow and any trading between this zone needs to be cautiously done. Only a break over 122.80 will make our mid-term outlook to bullish in the true sense to expect the gains towards the major psychological level of 125.00.”

This Week:

The Pounds-Yen pair mover the way as we indicated during last weekend and quoted above. The currency pair moved as high at 122.05 and found some resistance there. As we had mentioned during last weekend (quoted above) that we expected a very strong resistance zone between 121.80 and 122.80. The resistance took GBPJPY down towards 120.00 but a support came just above 120.00 to close the price for the week at 120.62.

As mentioned above that the range between 121.80 to 122.80 had proved to be an extremely strong resistance zone during November 2011 end to December 2011 end and we expect this range to have an strong resistance now also and only a break over 122.80 will make us expect any convincing upward gains towards the psychological resistance of 125.00 level.

During the next week, though we do not ignore the possibilities of some more upward gains but initially we will stay neutral. We will watch for the breaks above the recent resistance of 122.05 and then 122.20 to expect further gains as mentioned above. Also on the downward side we shall keep an eye for any firm break below 120.00 to expect a move towards a minor support near 119.45. Any break below 119.45 and then 119.20 will change our focus back towards downside for a retest of the recent low of 117.28. Please note that a break below 120.00 will be a break below both 22-day and 55-day EMA as well as the support of the slopping down upper edge of the daily Ichimoku cloud.

This is not for the next week but in general and as an addition to what we mentioned for any sudden downward break - we would expect the resumption of any real downward rally only with the break of 116.82 low. As we have been mentioning for the past couple of weekends, this area not only represents the previous strong support but also the 115.00 strong psychological support would start working from here.

Strategies for trading GBPJPY (British Pound-Japanese Yen):