It has been a while that I have not had a detailed review of a pair and it was just signals sent out.
In this review I would like to investigate a medium to long term plan for trading GBPJPY .
I am on this pair and here are the reasons that I think YEN will depreciate and Sterling will appreciate.
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First let’s review the reasons that I am long on YEN.
1) Here is the monthly weighted average YEN which shows how storng YEN is in compare to other 7 major currencies.
see how all 2018 it has been trying the break the upper band of the formation and could not. September candle has been closed very after have Aug candle making a false breakout of the highs. So this is a very chart and if you count you can see three attempts to go higher all failed.
Looking at the weekly chart is it also very with the last week of SEP closed as a below the major .
and on the daily it broke the and made two attempts to go higher and could not and closed the Friday as a candle. You can see how the last a few days YEN has been trading below the major 2018 and could not reverse inside the previous channel.
To replicate weighted average please see the screenshot title.
2) Nikkei is negatively correlated with FX. Below is the Monthly NIKKEI line chart and see although FX has been trapped in a range all 2018 but NIKKEI has just closed SEP very .
On the weekly you can see how the last week of SEP broke 1989 falling at 23794 and closed at 2412.
The only things that I do not like about the above chart is that the break is not substantial but I have plenty of other charts that shows YEN is really .
3) Next chart is Japanese YEN Yields and negative correlation is expected. See how on weekly chart made a classic break of the upper band of the and hold above that as the upper band acted a support and see how it is heading higher.
Line chart looks even better
4) Japanese Bonds is the last market and positive correlation is expected. This one even could not get back to the resistance as the selling pressure it was too high. So on Bonds means on YEN.
Next let’s review why I am on Sterling.
1) See how it bounced in AUG off the rising and I expect this to continue particularly as EMAs hold it in week 3 of SEP and just last week it bounced off the EMAs.
Zooming in we see how Sterling trapped between these two dotted lines supports and resistance.
It is likely Sterling to reach the support before heading higher again but looking at a very shorter Time Frame we have a that suggest that Sterling may go higher from here as it respected the lower band of the .
2) Bonds are negatively correlated with FX. See how Bonds have unfinished business after the breakout of the key . I expect this market to reach the rising . The lower the bonds go the higher GBP goes.
3) Gilts are the same as Bonds. Unfinished business for Gilts too. See how it has been falling for the last a few weeks. Have we seen this much bullishness in Sterling. NO…!
4) Yields are positively correlated with FX. This market is also has not reached the mid band of the yet.
5) Last market if FTSE and we expect an opposite correlation.
See how it touched the mid-band of the old channel and a pullback is expected.
Finally let’s review GBPJPY
1) See how on Monthly chart it made 3 attempts to get off the EMAs and go higher. It could not
2) On the daily see it broke the major falling red and bounce off that. I have Fibo overlaps as targets.
I am on this pair as I am on Yen and on Sterling.
I hope you enjoyed this analysis.
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Many thanks friends,