Medium term
Trade view / 23 August 2016 at 14:13 GMT

GBPJPY encounters upside resistance

Managing Partner / Spotlight Group
United Kingdom

The recent impulsive channel of GBPJPY has taken a look above the 132.00 level today, but feels extremely tired at these levels.

The time based technicals are favouring GBP in the short term, and yet this yields to selling of sterling against the yen as one moved to a weekly or monthly perspective.
GBPJPY Source: Spotlight Ideas

I am inclined to keep my selling stance that I adopted on August 15 as I still believe the yen will continue to feed off the general expectation that the Bank of England will look to reduce rates again in the UK. This comes at a time when the market is questioning how much more stimulus the Bank of Japan will be prepared to provide to the economy. Direct stimulus of JPY6 trillion was double the amount initially planned but would fall short of market expectations,

A break of 128.66 will resume larger down trend that has been the dominant force for this currency pair since July 2015 and target next projection level at 122.78.

GBPJPY 5-year chart:
Source: Spotlight Ideas

Management and risk:

Parameters: GBPJPY
Entry: Sell 132.00 14:00 GMT
Targets: 128.66 ... 122.78 ... 119.80 ... 116.83
Stop: 134.52
Time horizon: Medium-term

— Edited by Clare MacCarthy

Non-independent investment research disclaimer applies. Read more
24 August
andrisnalin andrisnalin
Hi Stephen, what caould be considerable as medium-term? Thanks
24 August
Stephen Pope Stephen Pope
Hello Andrisnalin,

This may sound lame but in CFA theory class "Medium-Term" is an asset holding period or investment horizon that is intermediate in nature.

The exact period of time that is considered medium term depends on the investor's personal preferences, as well as on the asset class under consideration.

A day trader who probably does not hold open positions overnight may consider a stock that is held for a couple of weeks as a "medium term" position. In contrast long-term investor may define medium term as a holding period of one to three years.

I think for this site we should say three to four months.
25 August
andrisnalin andrisnalin
Thanks Stephen for your explanation, and also for your thoughts on close future movements of this pair. I'll follow the actions closely. Cheers
25 August
AVLion AVLion
Again your assumptions are more realistic than what market taking it to.
30 August
Charles Asmar Charles Asmar
Hi Stephen, I bought @ 1.32479 should I keep it?
30 August
Stephen Pope Stephen Pope
Hi Charles,

Given your question is tagged to a note of mine on GBPJPY is that the pair you refer to and missed placed the decimal...or is it GBPUSD?

If GBPJPY then with the pair at 134.08 I am very close to my stop at 134.52...I have to leave it in place as from a week onward the sentiment is to sell GBP.

Still, to answer any GBPUSD question I still favour the Dollar. At 1.3106 it is just under the level your message indicates...I cannot advocate being long GBP against the Dollar.

The shortest time horizons from a technical perspective are neutral or GBP supportive...go longer where I think there is more weight of argument then the technicals are neutral to strong sell. So unless you are in the GBPUSD market for a short time I would sell GBPUSD. In the short-term I think GBP has an uphill battle and longer out I see 1.30 ... 1.28 as likely data points.

30 August
Charles Asmar Charles Asmar
Hi Stephen,

Actually I still holding long GBPJPY @ 132.479 and another short @ 134.158!

Regarding GBPUSD I am going to follow this pair this week.

30 August
andrisnalin andrisnalin
Hi Stephen,

I still watch at the price action on this pair and believe your original idea about medium term movement yet broken, though now the price retraces last impulsive wave (July 21 - Aug 16 in 4hr chart) @ 38.2 FIBO. I keep on selling stance till fibo 61.8 @ 137.28

30 August
AVLion AVLion
Whats now about the prospect of GbpJpy pair...? Is it have still got Steels to go further or is it boosted enough?
30 August
Stephen Pope Stephen Pope
I have been stopped out...I sense the short-term momentum is with GBP...but it will fade over the week. 135.80 ...137.55 are next upside targets.
31 August
vanita vanita
Dear Steve,
I know you are out of gbpjpy trade .
But I am holding as I look that this pair should move downwards as pound would be under pressure more than yen against USD.
So please express your views and give me stop loss so that I can not loss more.
Or suggest me hedge currency so that I can place order against gbpjpy.
Waiting for your precious reply.

31 August
Stephen Pope Stephen Pope
Dear Vanita,

this is a most frustrating currency pair. The near term technicals are all GBP supportive, however, that fades at the one week and one month level.

The density of potential resistance points is becoming more compact with numbers such as
137.65 ... 138.98 ... 139.12 ... 141.20 ... 142.57 ... 144.62 ...

I would suggest one takes 139.50 as a final exit point.
01 September
andrisnalin andrisnalin
Bearish engulfing candle pattern (or dark cloud cover pattern) is now posted @ 61.8% of upper mentioned impulsive wave. I'm on belief the pair is close now to be under selling pressure.


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