Disliked{quote} Hey ally, any ideas as to why the gbp/jpy has been erratic in its hourly sentiments as of late?Ignored
What I've observe is the fact that this beast dropped 1156 pips in the first 2 weeks of Jan posting a 168% on it's monthly average range as compare to 714 pips on average for the last 24 months. Knowing this it is only common to think that this pair would and could enter into a 2 possible scenarios: a) retrace some b4 its next move or b)consolidate after profit taking and enter into what I believe is it's current stage "RANGE TRADING".
When we puzzle ourselves as to why not keep going like it was?? Then we have to look at the facts and find the answers based on latest developments(fundamentals that affect both countries);
-QE was introduced by the EU and as negative as it was for the Euro it benefits the pound.
-The health of the London economy is not as bad as others countries in the EU and this is based on their latest #'s.(look 'em up)
-Japan keeps on posting negative news and this supports the pound as well.( gbp/jpy)
Now Technically:
-If we care to look at the daily and weekly chart, one could find that this beast still up trending and just gave up some of the Santa Rally that took place towards the end of the last year because of the latest developments and not because it is in bear territory.
-Drawing a fib from last year alone low to high, the 50% fib plus the 1.618 ext of the last ABCD retracement as of lately is good enough reason to understand why it hasn't kept dropping pips. Technical traders look for this areas to ad to positions.
MY take:
-I believe that more downside is to be seen on this pair but I also think that the fundies will make one more push higher to trap as many bulls as possible and then drop the hammer on them. Think about it, right now everyone and their mother is bearish but they wont make money that way.