{x} | Trading.live

Abstract: The GBPJPY rose to its highest level since the end of August. The momentum index hovers in the positive zone. The market is now focusing on the possibility of intervention by the authorities.

Fundamentals

Like the JPYUSD, the JPYGBP continues to hover near decades lows following yesterday's sell-off, as Japan's Minister of Finance, Shunichi Suzuki, reiterated the government's commitment to addressing the JPY's volatility. In his latest speech, Suzuki avoided any direct reference to intervening in the currency markets, instead focusing on a strategy to balance the effects of a weaker JPY.

Suzuki said, "It is important to maximize the positive impact of the weak JPY and reduce the negative impact." His remarks come at a time when the Japanese government is facing the challenge of dealing with the economic impact of the long-term depreciation of the JPY. Although the depreciation of the JPY is beneficial to Japan's export-driven economy, it will also cause people's concerns about the increase in import costs, especially in the context of global inflationary pressures.

Suzuki's emphasis on maximizing the benefits of the weak JPY and reducing its disadvantages highlights the delicate and balanced actions that the Japanese authorities must take in the current economic environment. His statement shows that the government is cautious, which may imply that it will take cautious measures instead of suddenly intervening in the market.

On the other side, the inflation rate in the UK will be announced on Wednesday, and it is expected to drop sharply from 6.7% to 4.8% compared with last month. This huge decline has left a lot of room for disappointment, and the rise of the consumer price index may put upward pressure on the GBPJPY, which has been at a high level for several months. It is for this reason that investors should pay attention to the possibility of the Bank of Japan (BOJ) intervening in the market, whether directly or indirectly.

The GBPJPY is currently showing bullish momentum, suggesting that the bullish momentum could continue up to the first resistance level at 186.63.

The first support level at 185.77 is identified as a retracement support level, providing a potential base for a rebound. In addition, the second support level at 184.64 is considered to be a multi-band low support level, further enhancing the potential strength of the support zone.

On the upside, the first resistance level at 186.63 represents a high resistance, indicating an important level where the price could face resistance or a potential reversal in its upward move. This level is crucial for investors to monitor as it could influence the continuation of the bullish trend.

Technical Analysis

The GBPJPY has been in a long-term uptrend since January, touching an eight-year high of 186.76 on August 22 before experiencing a pullback. After a period of range-bound volatility, the GBPJPY regained its footing above the 50-day SMA, touching a two-month high of 185.94, but the uptrend doesn't seem to be stopping.

At present, the intraday deviation of the GBPJPY is biased upward again, and at the same time, the short-term oscillators are tilted upward. The bulls' decisive breakthrough at the resistance level of 186.75 will confirm the recovery of a larger upward trend. The next target will be the 161.8% Fibonacci retracement at 188.25 of 178.02 - 183.79 range.

On the downside, bears need to break the 184.61 support level to indicate a short-term top. Otherwise, once retraced, further gains will remain favorable.

In the bigger picture, as long as the bulls hold the 176.29 support level, the larger uptrend that started from the 123.94 level should still be in progress. A break above 186.75 would be expected to test the 2015 high at 195.86. Nonetheless, a failure to break 176.29 would confirm an intermediate-term top and bring about a longer and deeper consolidation.

Overall, despite the GBPJPY's strong gains, it may face some short-term headwinds, with upside momentum still intact as long as the key range is not broken. It is recommended to buy low and sell.

Trading Recommendations

Trading direction: Long

Entry price: 189.00

Target price: 183.50

Stop loss: 190.20

Deadline: 2023-11-28 23:55:00

Support: 185.93, 185.26, 184.55

Resistance: 186.75, 187.23, 188.25