GBP/JPY Weekly Forecast: Analysis and Predictions for Traders
GBP/JPY displayed a strong rebound last week, indicating that the decline from 193.45 may have concluded at 183.70. The rebound from this level is viewed as the third leg of the corrective pattern from 183.70. As we head into this week, the initial bias remains on the upside with a focus on the 193.45 resistance level. A decisive breakthrough at this point could potentially target the 61.8% retracement level of 208.09 to 180.00 at 197.35. Conversely, a move below the 188.70 minor support level could shift the intraday bias to neutral.
In a broader perspective, the price movements from 208.09 are interpreted as a correction within the overall rally from 123.94 (the 2020 low). This suggests a consolidation range is forming between the 38.2% retracement level of 123.94 to 208.09 at 175.94 and 208.09. However, a significant break below 175.94 could indicate a deeper correction is in progress.
Looking at the long-term picture, the bearish divergence observed in the Weekly MACD at 208.09 signifies at least a medium-term peak. While it may be premature to determine that the uptrend from 122.75 (the 2016 low) has concluded, it is evident that a medium-term corrective phase is likely underway, with the potential risk of a correction towards the 55 Weekly Exponential Moving Average, currently situated at 170.18.
Factors Influencing GBP/JPY
Several factors can influence the GBP/JPY pair’s movements, including economic data releases, geopolitical events, and monetary policy decisions. Traders should pay close attention to these factors to anticipate potential price shifts in the currency pair.
Economic Data Releases: Key economic indicators such as Gross Domestic Product (GDP), inflation rates, and employment data can impact the strength of the British Pound and Japanese Yen. Positive economic data from the UK or Japan could lead to a stronger GBP/JPY, while negative data could weaken the pair.
Geopolitical Events: Political developments, such as Brexit negotiations or trade disputes between Japan and other countries, can also influence the GBP/JPY exchange rate. Uncertainty surrounding these events may lead to heightened volatility in the currency pair.
Monetary Policy Decisions: Central bank decisions, particularly from the Bank of England (BoE) and the Bank of Japan (BoJ), can have a significant impact on GBP/JPY. Interest rate changes, quantitative easing measures, and forward guidance from these central banks can affect the currency pair’s direction.
Technical Analysis and Forecast
Technical analysis plays a crucial role in predicting future price movements in the GBP/JPY pair. Traders often utilize various technical indicators and chart patterns to identify potential entry and exit points. Let’s delve into the technical analysis and forecast for GBP/JPY in the upcoming weeks.
Moving Averages: The 50-day and 200-day moving averages are commonly used by traders to gauge the overall trend in a currency pair. A bullish crossover, where the 50-day moving average crosses above the 200-day moving average, could signal a potential uptrend in GBP/JPY.
Relative Strength Index (RSI): The RSI is a momentum oscillator that measures the speed and change of price movements. A reading above 70 indicates that the currency pair may be overbought, while a reading below 30 suggests it may be oversold. Traders can use the RSI to identify potential reversal points in GBP/JPY.
Support and Resistance Levels: Identifying key support and resistance levels is essential for traders to set profit targets and stop-loss orders. Previous swing highs and lows can serve as potential support and resistance levels for GBP/JPY.
Conclusion
In conclusion, the GBP/JPY pair’s recent rebound indicates a potential shift in the market sentiment towards a bullish outlook. However, traders should remain vigilant of key economic data releases, geopolitical events, and monetary policy decisions that could influence the currency pair’s movements. By incorporating technical analysis and staying informed of market developments, traders can make informed decisions and navigate the dynamic landscape of the GBP/JPY market effectively.
