Over the last couple of weeks, the GBPJPY pair has been establishing a major bullish pullback, primarily driven by heightened investors' optimism in Britain. The latter was triggered by the easing of government restrictions in the UK despite persisting delta variant complications. Presently, the impact of this optimism seems to be waning.
The positive growth numbers in Japan from last week have managed to help the struggling yen recuperate in the short term, which is now likely to lead to another bearish reversal on GBPJPY. This trend is also likely to be bolstered by the expectations for robust growth in the broader Asia region.
In contrast, the sterling is likely to be affected negatively by the strengthening U.S. dollar, which would increase the likelihood of another GBPJPY bearish reversal. Hence, the current setup seems suitable for the implementation of contrarian trading strategies on the price of GBPJPY by bears.
As can be seen on the daily chart below, the price action is currently testing the major descending trend line (in red) for the fourth time. The price has always reversed itself from this prominent threshold on the three separate occasions it probed it before, which is why a fourth reversal at the present rate seems highly probable.
|Short Term||Long Term||Net % Gains|
|83 BPS||41 PIPS||Pending||Pending||
|83 BPS||41 PIPS|
|Net % Gains|
Disclaimer: Your capital is at risk! Trading and investing on the financial markets carries a significant risk of loss. Each material, shown on this website, is provided for educational purposes only. A perfect, 100% accurate method of analysis does not exist. If you make a decision to trade or invest, based on the information from this website, you will be doing it at your own risk. Under no circumstances is Trendsharks responsible for any capital losses or damages you might suffer, while using the company’s products and services. For more information read our Terms & Conditions and Risk Disclaimer.