The GBPJPY currency pair has been rallying since September 16, rebounding from a low of 183.711. Strong upward momentum is indicated by five consecutive bullish candles and supportive technical indicators like the 50-period Exponential Moving Average (EMA), the Momentum oscillator above 100, and the Relative Strength Index (RSI) above 50. This bullish trend is expected to continue, especially if the pair breaks above the key level of 193.484, potentially paving the way for higher exchange rates.
Overview
The GBPJPY currency pair has been rallying since September 16, rebounding from a low of 183.711. Strong upward momentum is indicated by five consecutive bullish candles and supportive technical indicators like the 50-period Exponential Moving Average (EMA), the Momentum oscillator above 100, and the Relative Strength Index (RSI) above 50. This bullish trend is expected to continue, especially if the pair breaks above the key level of 193.484, potentially paving the way for higher exchange rates.
Key Economic Events
Friday 02:30 am (GMT+3) - Japan: BOJ Policy Rate (JPY)
Friday 15:30 (GMT+3) - Canada: Retail Sales m/m (CAD)
Technical Analysis
The GBPJPY has been on a rally since September 16 after reaching a daily low of 183.711. It has shown five consecutive bullish candles, forming higher highs and higher lows, indicating a strong upward momentum. This momentum is expected to strengthen with the formation of a failure swing, a significant reversal pattern in technical analysis. Specifically, the trough at 183.711 did not drop below the previous trough, and prices are now targeting the peak at 193.484. If the bulls manage to push the exchange rate above 193.484, it will pave the way for an uptrend and higher exchange rates. The bullish outlook is supported by the 50-period Exponential Moving Average (EMA), the Momentum oscillator, and the Relative Strength Index (RSI). Prices are currently above the 50-period EMA, the Momentum oscillator values are above 100, and the RSI is above 50, all confirming the bullish bias.
Potential Upside Targets
If the bulls maintain control of the market, traders may consider the following four potential upside targets:
193.484: The first resistance is established at 193.484, corresponding to the daily high from September 2.
195.854: The second price target is identified at 195.854, representing a daily low from July 25.
199.524: The third price target level is established at 199.524, corresponding the 161.8% Fibonacci Extension drawn form the swing high of 193.484 to the swing low of 183.711.
208.110: An additional price objective is recognized at 208.110, aligning with the daily high marked on July 11.
Potential Downside Targets
If the bears take control of the market, traders may find potential opportunities in the following four downside targets:
185.570: The initial level of support is seen at 185.570, corresponding to the weekly Pivot Point (PP) calculated using the standard method.
183.711: The second level of support is identified at 183.711, which corresponds to the trough from September 11.
180.093: The third level of support is established at 180.093, representing a daily low marked on August 5.
178.335: An additional support is seen at 178.335, reflecting a weekly trough.
Fundamentals
On September 18, 2024, the UK's MPC held the Bank Rate at 5% but decided to cut UK government bond holdings by £100 billion to manage inflation and meet the 2% target. GDP growth remains stable, with slight inflation increases needing ongoing policy adjustments.
Similarly, the Bank of Japan maintained its call rate at 0.25%. Japan's economy shows moderate recovery with stable exports, improved corporate profits, and rising private consumption, though housing investment is weak. Inflation stands at 2.5-3.0%, with expectations for continued growth and monitoring of economic and commodity price risks.
Conclusion
The GBPJPY pair has shown strong bullish momentum since September 16, with technical indicators and recent price action pointing to further gains. A key resistance level to watch is 193.484, which, if surpassed, could lead to a continued uptrend. However, traders should also monitor potential support and resistance levels and upcoming economic events, which could influence market dynamics.