Let's Try That Again
GBPJPY is back in my sights again this week. I was last looking at it during the block of consolidation which formed ahead of 157.88, looking for a breakout. However, price ultimately resolved lower from that area. Following a rebound off the 153.39 level, we are now turning higher once again and this current block of micro-consolidation is suggesting fresh breakout opportunities.
The retail market remains heavily short GBPJPY, suggesting scope for an upside move. Additionally, the uptick in hawkishness from the BOE has put GBP back in favour. With the UK moving past omicron now, optimism looks set to continue. The obvious risk here is JPY safe haven demand from tensions between Russia and Ukraine. However, the current situation might drag on for weeks if not months before resolving.
So, in the meantime, I’m looking for a fresh break higher in the pair. Aggressive longs on a break of current 156.57 highs targeting 157.88 initially and 159.98 thereafter. More conservative entry is the break of 157.88 targeting 159.98. Invalidation below 155.17.
Keep An Eye On
A raft of UK data over the later part of the week, along with BOE governor Bailey speaking, will be the main focus. Traders will be closely watching UK data to see how economy performed over the recent omicron period. If we see any upside surprises, this should keep the focus firmly on BOE tightening, supporting GBP near term.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.