GBP/JPY Breaks The Support Of 5-Week EMA After 9 Weeks

January 27, 2013 in Chart Alert

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For past 9 weeks GBP/JPY had been finding support near the 5-week EMA level with every drop in the price level. The currency pair broke that trend last week after over two months.

Past 3 weeks highs have been as follows:

Week of  January 7th: 144.42

Week of  January 17th: 144.81

Week of  January 21st: 144.24

The resistance is clearly indicating that the psychological resistance of 145.00 is in the picture. With a fall to 139.26, during last week GBP JPY had broken the trend of past 9 weeks as it had dropped below the support of 5-week EMA. The currency pair recovered strongly to 144.24 but the break of pattern brings in the possibilities of further consolidation.

Overall the economic data from Japan has been weak and on the other hand the recent economic releases go in the favor of GBP as clear from the last week’s economic releases as follows:

Recent economic releases from the U.K. and Japan

U.K.

  • Rightmove House Price Index: The year on year change 2.4% against the previous 1.4%.
  • Public Section Net Borrowing: GBP 13.208 billion, negative as compared to the consensus of GBP 13.000 billion but better than the previous 14.266 billion British pounds.
  • Claimant Count: The claimant count change numbers in December were -12.1K and quite positive as compared to the forecasts (0.0K) as well as the previous -8.9K. The claimant count rate remained same at 4.8%.
  • Average Earnings including bonus (3 months/year): 1.5% and though same as the consensus but was less than the previous 1.8%.
  • ILO Unemployment Rate (3 months): 7.7% and better than the consensus and previous 7.8%.
  • BBA Mortgage Approvals: 33.6K and though less than the consensus of 34.1K but were same as the previous release.
  • Gross Domestic Product (prelim): Year on year change in Q4 was same as the previous quarter’s 0.0% and was less than the expected 0.2%. The quarter on quarter change was -0.3% and negative as compared to the forecasts (-0.1%) as well as the previous 0.9%.

Japan

  • Interest rate was kept same at 0.1%.
  • All Industry Activity Index (MoM): -0.3% and same as the consensus but less than the previous 0.2%.
  • Leading Economic Index: 92.1 against the previous 92.8.
  • Exports/Imports and Merchandise Trade Balance: Year on year change in the exports in December was -5.8% and quite negative as compared to the forecasts (-4.2%) as well as the previous -4.1%. Imports increased by 1.9% on year on year basis against the consensus of 1.5% and previous 0.9%. The merchandise trade balance in December was JPY  -641.5 billions against the consensus of JPY -534.0 billion but was better than the previous -953.4 billion Japanese yen.
  • Consumer Price Index: Year on year change in the national CPI was -0.1% and was better than the consensus and previous -0.2% but this was 7th drop in the CPI in past 8 months. The national CPI ex-food & energy dropped by -0.6% which was higher than the consensus of -0.5% but same as the previous release.

Considering this the only factor which seems to be going against the pair seems to be the fear of 145.00.

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Himanshu, by qualification a mechanical engineer with diversified experience of working in Europe and Asia Pacific, has been trading in Forex market for close to a decade. Himanshu also runs one of the fastest growing Forex portal ForexAbode.com which provides free Forex trading analysis, forecast & strategies, free trading tools, education, Forex Blogs and Forex Forum and contributes the analysis to financial and Forex websites like SeekingAlpha.com, MarketOracle.co.uk, ForexStreet.net, CountingPips.com, International Business Times and some more. Contact details: You may please leave your suggestions, comments or complaints using the comment form or write to us using the Contact Us page. You may also connect the author on Google at +Himanshu Jain

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1 response to GBP/JPY Breaks The Support Of 5-Week EMA After 9 Weeks

  1. Thank for you excellent inf.

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