GBPJPY – Nearing Key Resistance

GBPJPY – Nearing Key Resistance

Chart Of The Day

Over the past few week yen and yen crosses have been in a one-way move to the upside, culminating in today’s blow off rally that took USDJPY to 113.00. One of the key crosses to get the biggest benefit for the move has been GBPJPY which has rallied relentlessly for nearly 15 days straight.

But now that the pair is nearing the key 140.00 figure the upside momentum is likely to slow. The drop will probably come from the yen part of the cross as cable has shown good relative strength lately and with today’s announcement of large stimulus package in 2017 should continue to see UK economy grow at a healthy pace.

A pullback to first line of support at the 136.00 level may be possible, but that would just offer the bulls in the pair better value to enter the trade for ultimate push toward the 150.00 figure.

GBPJPY – On the Verge of Breakdown?

GBPJPY – On the Verge of Breakdown?

Chart Of The Day Uncategorized

Ever since Boris Johnson opened his mouth and suggested that Article 50 was coming sooner rather than later, cable has been under a relentless selling assault. This week there is little meaningful data on the UK docket, but the damage from rhetoric has been done. The pound has been a sell every rally trade and we see nothing in the immediate horizon that would change that dynamic.

Meanwhile, USD/JPY has been under selling assault as well as shorts focus on the the key 100.00 barrier and risk aversion flows make the pair vulnerable to breaching that level. Which is the GBP/JPY cross remains the strongest momentum sell trade in the currency market. The pair is now perched near the key 130.00 support level, but a break below could open a slew of stop runs and ultimately the pair could see 125.00 as selling from both side continues unabated.

GBPJPY – Ready to Bust?

GBPJPY – Ready to Bust?

Chart Of The Day

One of the better trading signals out there is when fundamentals move one way and technicals the other. For the past week UK data has been nothing short of horrid yet cable has stopped falling and has actually remained relatively bid against most of the majors.

One of the stronger crosses over the past few days has been GBP/JPY which has been fueled not only by relative strength of cable but by the breakout in USD/JPY. With the pair now approaching the 135.00 figure it stands on the cusp of breakout that could propel it towards the 140.00 level over the next several weeks if US data proves positive and UK data simply beats the lower expectations.

GBPJPY – Ready to Rumble?

GBPJPY – Ready to Rumble?

Chart Of The Day

The whole week has been building up to this. The BOJ announcement tonight is sure to move the yen and the yen pairs as the market awaits the decision about the size and scope of monetary stimulus.

Any number less than 20T yen is likely to disappoint and could send the yen several big figures lower, but if the BOJ brings the bazooka and surprises the market to the upside yen pairs could skyrocket higher. Although cable has been weak today the pair continues to hold the 1.3000 barrier and a pop in yen could take GBP/JPY right back above the 140.00 figure.

If on the other hand the market is disappointed GBP/JPY could quickly drop to 1.3500 and perhaps even 1.3200 over the next few days.

GBP/JPY – The Brexit Trade

GBP/JPY – The Brexit Trade

Chart Of The Day Uncategorized

Of all the currency pairs that are likely to be affected by the Brexit vote none will be more volatile than GBP/JPY. The pair will reflect not only the outcome of the result on UK assets but also on global risk appetite as the yen component should soar on any relief rally if the Brits decide to stay and will sink if the choose to leave.

In fact some analysts are predicting that USD/JPY could swing as much as 300 points either way if the results surprise the markets and put the whole global economic structure into question.

Technically the pair faces the first serious resistance at 160.00 on the upside while the downside could prove to be much more dangerous with the cross dropping to as low as 130.00 should UK vote for Leave.

GBP/JPY – Fresh Lows Ahead?

GBP/JPY – Fresh Lows Ahead?

Chart Of The Day

GBP/JPY made yearly lows today dropping below the 150.00 level before recovering slightly ahead of the North American close. The pair is at the intersection of the perfect storm in the Brexit trade as it stands to either benefit or suffer the most from the results.

The Brexit story is not only a story about the UK economy but also about the stress on global capital markets. If UK were to leave EU it could start a trend that could unravel the current economic order and send markets into massive selloffs which is why along with the decline in GBP USD/JPY has been dropping as well. Of course if the risk passes the relief rally would trigger a swift short covering move in both pairs.

For now the GBP/JPY remains under pressure and another test of 150.00 could open the way towards 145.00 while the upside is capped at 155.00 until the referendum vote provides clarity.

GBP/JPY Headed for 168?

GBP/JPY Headed for 168?

Chart Of The Day

GBP/JPY Headed for 168?

Between Bank of England Governor Carney’s dovishness and the Federal Reserve’s less hawkish monetary policy statement, GBP/JPY should be trading lower. Every change that the Federal Reserve made suggests that they are more worried about inflation and less inclined to raise interest rates in March. There are still 7 weeks and 2 non-farm payroll reports until the March meeting and a lot can change from now until then but judging from today’s FOMC statement, if oil prices and global equities fail to recover before the March meeting, U.S. policymakers will pass on raising rates. Although USD/JPY was unfazed by FOMC, rallies should be sold as we are looking for a move back to 118 and a decline in USD/JPY will be negative for GBP/JPY. At the same time, the second worst performing currency today was the British pound, which fell sharply versus the U.S. dollar. Investors are worried that if the Fed delays tightening and ends up only raising interest rates by another 25bp this year, then the Bank of England could forgo raising rates at all in 2016. U.K. GDP numbers are scheduled for release tomorrow and with spending falling 2 out of the last 3 months of the year, the risk is to the downside. Slower GDP growth could drive GBP/JPY below 168.

Technically GBP/JPY tested but failed to break above 170 four out of the last four trading days. Given recent fundamental developments we believe this resistance which is actually at 170.50 will hold. 168.25, the 38.2% Fibonacci retracement of the 2007 to 2011 decline will serve as interim support with the next significant support level being 166.00, the 38.2% Fib retracement of the 2011 to 2015 rise

GBP/JPY Big Trade Orders 01.27.2016 -135

Swing

1/28 – **Close GBP/JPY at market (now 170.65) for -135
1/28 – First Entry Triggered

Only Aggressive orders

Place Order to SELL GBP/JPY at 169.30

STOP at 171.30

FOMC statement was less hawkish. We are looking for weak UK GDP – so laying out orders to sell GBP/JPY. We have strong reasons to believe that tomorrow’s UK GDP numbers will be weak with retail sales and trade activity deteriorating significantly in the fourth quarter. Also BoE Governor Carney has been consistently dovish, confirming our view that the UK central bank will leave interest rates unchanged for most of the year. The earliest we can possibly hope for a rate hike would be in Q4 and even then, it would require a significant recovery in oil prices.

GBP/JPY – Headed for 190?

GBP/JPY – Headed for 190?

Chart Of The Day

GBP/JPY – Headed for 190?

We like the GBP and we like USD/JPY, which makes us extremely bullish GBP/JPY. This would be a pair that we normally would pick for a Big Trade if not for the fact that the currency is trading near the top of its recent range and we would need a deeper correction that is unlikely to occur before the Bank of England meeting and Quarterly Inflation Report – the 2 catalysts that we believe will drive sterling sharply higher. Since the October monetary policy meeting, there has been significantly more improvement that deterioration in the U.K. economy. Retail sales rose strongly in September, the unemployment rate declined, wages increased and service along with manufacturing activity accelerated. Although consumer prices eased, which is a big problem for the central bank, the uptick in PPI and the rise in market indicators should keep the central bank optimistic. The BoE is not looking to raise interest rates at this time but the improvement in the economy could lead to upgraded economic forecasts and/or encourage one additional MPC member to join Ian McCafferty in voting for an immediate rate rise. At the same time, USD/JPY is supported by today’s hawkish comments from Yellen and Dudley who both say that December is a live meeting for a rate hike. U.S. data has also been very good with service sector activity expanding at its second strongest pace in 10 years. More importantly, the employment component of the index rose to its second highest level since August 2005. The last time we saw a number this strong was in July 2015, the month that non-farm payrolls rose 223k. ADP declined slightly from 190K to 182K but the strength of ISM, low level of jobless claims and the optimism of the Fed make us confident that non-farm payrolls will rise by at least 200K.

Technically, there’s quite a bit of support below current levels in GBP/JPY. This includes the 200-day SMA at 185.80 and the 38.2% Fibonacci retracement of the June to September decline at 186.23. Resistance is between 188 (the 50% Fib of the same move and 188.50, the 100-day SMA. So while we believe GBP/JPY is headed for 190, it could make a long pit stop near 188.

BK 2 New Big Trade Orders 09.22.2015 USDJPY & GBPJPY

Swing

**Cancel EUR/GBP & EUR/USD Orders. 2 New Big Trade Orders

1. USD/JPY

Place Order to Buy 1 Lot USD/JPY at 119.47

Pending Order to Buy 1 More Lot at 117.70

Stop for ALL at 116.00

2. GBP/JPY

Place Order to Buy 1 Lot USD/JPY at 183.60

Pending Order to Buy 1 More Lot at 181.70

Stop for ALL at 179.70

The decline in U.S. equities this morning has taken many of the major currencies lower and we are hoping that the pullback will be extensive enough for us to reestablish our long dollar and short yen trades. While the market was disappointed by the Federal Reserve’s decision to leave rates unchanged, recent comments from U.S. officials indicate that most policymakers are still planning for a rate hike this year. We have been looking for USD/JPY to pullback and use that opportunity to reload our long dollar positions. There are no major U.S. economic reports this week but a recovery in USD/JPY could be driven by Japanese data.

Japanese markets are closed until Thursday but when they open, Japan is expected to report that core inflation fell below zero for the first time since April 2013. Between this “bad news” and S&P’s recent downgrade of Japan, a further slide in the Yen is likely. For this reason, we like SELLING JPY versus the USD and GBP. If the Fed maintains its view that rates will rise this year, the market will also maintain its view that the BoE could raise rates in early 2016. Hawkish comments from UK policymakers in the face of weaker data indicates that policymakers are are open to the idea.

BK – New GBP/JPY Orders for 08.10.2015 – Canceled

Swing

Orders Canceled on 8.18.2015

Reload GBP/JPY Orders

Place Order to Buy 1 Lot GBP/JPY at 193.08

Place Order to Buy 1 More at 191.10

Stop for ALL at 189.60

We like GBP/USD and we like USD/JPY which makes GBPJPY one of our favorite trades. Even after all of last week’s developments, the Federal Reserve and the Bank of England will be the first 2 major central banks to raise interest rates. However we believe that we will have the opportunity to buy the pair at lower levels because the lack of major event risk could lead to additional profit taking in GBP and USD. As such, we are lowering our first entry order to 191.10