GBP/JPY Closes in on Main Resistance Ranges

GBP worth, information and evaluation:

  • The sturdy transfer increased in GBP/JPY, that has taken it from a current low at 148.96 on September 21 to above 155 at the moment, is now going through stiff resistance that should be overcome if the pattern is to proceed.
  • Even when it may break by way of the 156.11 excessive recorded on Might 27, there’s additional resistance on the 156.62 excessive recorded on February 2, 2018.

GBP/JPY going through key check

The energy of the current advance in GBP/JPY is going through a key check on the 156.11 excessive recorded on Might 27 and it’ll probably pause at that stage as merchants determine whether or not to maintain shopping for the pair. If it does break by way of, GBP will probably be at its highest stage since early 2018.

Furthermore, an additional advance above the 156.62 excessive recorded in February that yr would take GBP to its highest towards JPY for greater than 5 years, as proven on the weekly chart beneath.

GBP/JPY Value Chart, Weekly Timeframe (January 18, 2016 – October 14, 2021)

Latest GBP/JPY price chart.

Supply: IG (You possibly can click on on it for a bigger picture)

On the GBP facet of the equation, the Pound is benefiting from ideas that the Financial institution of England might be the second main central financial institution, after solely New Zealand, to tighten financial coverage within the present cycle. On the JPY facet, Financial institution of Japan Coverage Board member Noguchi Asahi stated Thursday that he dominated out withdrawing stimulus even after the Japanese financial system recovers from the hit brought on by the Covid-19 pandemic.

That ought to preserve the upward pattern in GBP/JPY going longer-term, however the resistance ranges talked about earlier will probably trigger at the least a short lived barrier first.

Bullish sign from positioning knowledge

As for sentiment, IG shopper figures present that 27.15% of merchants utilizing the corporate’s platforms are net-long, with the ratio of merchants brief to lengthy at 2.68 to 1. The variety of merchants net-long is 0.49% increased than yesterday however 13.50% decrease than final week, whereas the variety of merchants net-short is 2.42% increased than yesterday and 33.50% increased than final week.

Right here at DailyFX, we usually take a contrarian view to crowd sentiment, and the very fact merchants are net-short suggests GBP/JPY costs could proceed to rise. Furthermore, traders are additional net-short than yesterday and final week, and the mixture of present sentiment and up to date adjustments provides us a stronger GBP/JPY-bullish contrarian buying and selling bias.

— Written by Martin Essex, Analyst

Be happy to contact me on Twitter @MartinSEssex

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