GBP/JPY Breaks Above Key Trendline Resistance | Forex Factory

  • GBP/JPY Breaks Above Key Trendline Resistance

    From fxtimes.com

    Breakout, targets: The GBP/JPY has broken above the 129.65-130.00 resistance area noted in the previous update. It is also accelerating above the rising channel established since June. This breaks not only the October high, but also a declining trendline that goes back to April 2010, to a resistance pivot near 145.75. The breakout therefore opens up this 145.75 as an eventual long-term target. However the 2012 high at 133.48 will be the short-term target and first challenge to the current rally. A swing projection targets 135.00 and is a more aggressive target than the 2012-high of 133.48. The next target after that ... (full story)

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Fudomyo
Nov 21, 2012 10:27am
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This is an interesting point that I started thinking about in April 2011 about the GBP/JPY resistance trend line.

You can include the wick from the Monthly candle spike when there was a coordinated CB intervention after the Tsunami to prop up the Yen. Or you can treat it as an anomaly.

On GBP/JPY if you draw the trend line from the August 2010 Monthly high, across the May 2011 Monthly high, across the May 2012 Monthly high and ignore the intervention wick, it's interesting where price stopped today. Same pattern played out on EURJPY.

This was my personal preference for a target, because it's a 4 point touch trend line, and the coordinated CB intervention was a rare market outlier event. We'll have to see how the market reacts here, but it's something to consider.
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Fudomyo
Nov 21, 2012 12:15pm
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These are all important factors. Part of me knows the Yen should naturally weaken due to the fact that domestic bond buying power to maintain the debt at it's current pace will be expended by 2016.

But given how disastrous a weak Yen would be to China and Korea's economic engines, I think there will be regional push back if it moves too fast (On top of the superior firepower the Fed and ECB have to win a currency war against Japan).

Part of me sees this as a mark up for the fiscal cliff and/or the Eurozone crisis to potentially cushion the bottom if either of those hot up.

So Abe has played this very well if it's purely a verbal intervention. Internally, if hew wins election, he still has a fight on his hands because Shirakawa and a few other key players at BOJ won't destroy the yen simply for political expediency. A watered down, consensus driven compromise is more likely given how things typically work here.

Besides MS, when I see articles in Bloomberg talking about Yen bear vindication, it raises my suspicion that potentially someone's going to be left holding the bag at the top.

Next week should be interesting.




Quoting moaf
Interesting point. I think it's possible to get some bigger break upside. On the other hand, there are too much risks everywhere to change market attitude. BOJ tried many times to change direction of JPY. I do not think this action will. QE from ECB and FED. I do not think that BOJ can win with them. Fiscal cliff will be risk catalizator, just wait till next week (we have to get rid of Greece first). GBP looks like found the floor, but It doesn't want to rise. I will expect 200 pips correction in next days. how do you find GBPJPY in next days/weeks...
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Fudomyo
Nov 22, 2012 3:11am
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My outlook has been 90/92 if we break key resistance in the 84/85 area, longer term 100 and perhaps 120 area in 2014 .

The Yen was a rice rocket in 2000 once it broke 109 and took 2 years to top out at 135. We've had a similar compression at the bottom here. I'm cautiously bullish while we remain under the 85 handle, but 90 area would be the logical price extension medium term.

A lot can happen along the way which could change the picture, but it looks like Abe will get in and have BOJ start printing and buying construction bonds which will erode the Yen. Noda was fiscally responsible as PM, Abe won't be. So while he will be awful for Japan's long term prospects, he's going to create a lot of short term opportunities.

The big question is how much control will he have over BOJ to accomplish his goals.


Quoting moaf
Thanks, very good points. So all in all, what is your outlook on GBPJPY and other JPY major crosses ?
Reply
moaf
Nov 21, 2012 11:30am
Permalink
Quoting Fudomyo
This is an interesting point that I started thinking about in April 2011 about the GBP/JPY resistance trend line.

You can include the wick from the Monthly candle spike when there was a coordinated CB intervention after the Tsunami to prop up the Yen. Or you can treat it as an anomaly.

On GBP/JPY if you draw the trend line from the August 2010 Monthly high, across the May 2011 Monthly high, across the May 2012 Monthly high and ignore the intervention wick, it's interesting where price stopped today. Same pattern played out on EURJPY.

This...
Interesting point. I think it's possible to get some bigger break upside. On the other hand, there are too much risks everywhere to change market attitude. BOJ tried many times to change direction of JPY. I do not think this action will. QE from ECB and FED. I do not think that BOJ can win with them. Fiscal cliff will be risk catalizator, just wait till next week (we have to get rid of Greece first). GBP looks like found the floor, but It doesn't want to rise. I will expect 200 pips correction in next days. how do you find GBPJPY in next days/weeks ?

PS. I look at EURCHF as an indicator, no change at this moment.
Reply
moaf
Nov 21, 2012 11:36am
Permalink
Good to look at other UJ sentimenT (especially banks) :http://www.fxstreet.com/technical/currencies-forecast/?pair=usdjpy&time=2012-321

Of course MS is "perfect bullish", but remember last recommendation on EURUSD long at 1.31
Reply
moaf
Nov 21, 2012 12:51pm
Permalink
Quoting Fudomyo
These are all important factors. Part of me knows the Yen should naturally weaken due to the fact that domestic bond buying power to maintain the debt at it's current pace will be expended by 2016.

But given how disastrous a weak Yen would be to China and Korea's economic engines, I think there will be regional push back if it moves too fast (On top of the superior firepower the Fed and ECB have to win a currency war against Japan).

Part of me sees this as a mark up for the fiscal cliff and/or the Eurozone crisis to potentially cushion...
Thanks, very good points. So all in all, what is your outlook on GBPJPY and other JPY major crosses ?
Reply
finix
Nov 21, 2012 11:49am
Permalink
i think it will not be easy for bulls to break 131.75 at first attempt...there stands the logic to get short
Reply
thunderr
Nov 21, 2012 1:41pm
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Quoting moaf
thanks, very good points. So all in all, what is your outlook on gbpjpy and other jpy major crosses ?
any idea about audjpy?????
Reply
Trader#097A
Nov 21, 2012 10:29am
Permalink
This was my personal preference for a target,On GBP/JPY if you draw the trend line from the August 2010 Monthly high, across the May 2011 Monthly high, across the May 2012 Monthly high and ignore the intervention wick, it's interesting where price stopped today. Same pattern played out on EURJPY.
Reply
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