Tag: GBP/JPY

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Forex Signals

GBP/JPY Violates the Ascending Triangle Pattern – Bullish Signal Update! 

The GBP/JPY pair trades with a bullish bias at 142.090 level ever since it has violated the triple top resistance level of 141.296. On the higher side, the GBP/JPY pair soar until the next target level of 142.510. The GBP/JPY pair’s technical side is supporting strong bullish bias as the 10 & 20 periods EMA are in support of the buying trend. Here’s a quick trade plan…

The GBP/JPY pair trades with a bullish bias at 142.090 level ever since it has violated the triple top resistance level of 141.296. On the higher side, the GBP/JPY pair soar until the next target level of 142.510. The GBP/JPY pair’s technical side is supporting strong bullish bias as the 10 & 20 periods EMA are in support of the buying trend. Here’s a quick trade plan…

The GBP/JPY pair trades with a bullish bias at 142.090 level ever since it has violated the triple top resistance level of 141.296. On the higher side, the GBP/JPY pair soar until the next target level of 142.510. The GBP/JPY pair’s technical side is supporting strong bullish bias as the 10 & 20 periods EMA are in support of the buying trend. Here’s a quick trade plan…


Entry Price – Buy 141.942

Stop Loss – 141.944

Take Profit – 142.342

Risk to Reward – 1:1

Profit & Loss Per Standard Lot = -$400/ +$400

Profit & Loss Per Micro Lot = -$40/ +$40

Fellas, now you can check out forex trading signals via Forex Academy mobile app. Follow the links below.

iPhone Users: https://apps.apple.com/es/app/fasignals/id1521281368

Andriod Users: https://play.google.com/store/apps/details?id=academy.forex.thesignal&hl=en_US

Categories
Forex Fundamental Analysis

GBP/JPY Global Macro Analysis – Part 3

GBP/JPY Exogenous Analysis The United Kingdom and Japan Current Account Differential The current account data is the most comprehensive measure of a country’s participation in international trade. It is the sum of net exports, net factor income, and net transfer payments. Remember that in the forex market, the value of a country’s fluctuates depending on […]

GBP/JPY Exogenous Analysis The United Kingdom and Japan Current Account Differential The current account data is the most comprehensive measure of a country’s participation in international trade. It is the sum of net exports, net factor income, and net transfer payments. Remember that in the forex market, the value of a country’s fluctuates depending on […]

GBP/JPY Exogenous Analysis

  • The United Kingdom and Japan Current Account Differential

The current account data is the most comprehensive measure of a country’s participation in international trade. It is the sum of net exports, net factor income, and net transfer payments. Remember that in the forex market, the value of a country’s fluctuates depending on its demand. Therefore, when a country has a current surplus account, it means that the demand for its currency is higher, and vice versa.

In this case, the current account differential is the difference between the UK and Japan’s current account balance. If the current account differential is positive, it means that the GBP will appreciate more than JPY hence a bullish GBP/JPY. Conversely, if the current account differential is negative, JPY will appreciate faster than the GBP hence a bearish trend for GBP/JPY.

In Q3 2020, Japan had a current account surplus of $15.4 billion while the UK had a $20.97 billion deficit. Thus, the current account differential between GBP and JPY is – $36.37 billion. Thus, the UK and Japan current account differential have a score of -3.

In the forex market, the interest rate is one of the most closely monitored economic indicators. Suffice to say, traders and investors monitor every other domestic economic indicator to predict the interest rate policy changes. The interest rate differential for the GBP/JPY pair is the difference between the UK’s interest rate and that in Japan.

If the differential is positive, traders and investors can receive better returns by selling the JPY and buying the GBP, hence, bullish GBP/JPY. Conversely, if the interest rate differential is negative, currency traders would prefer to sell the GBP and buy JPY hence, the bearish GBP/JPY pair.

In 2020, the BOE cut interest rates from 0.75% to 0.1%, while the BOJ has maintained an interest rate of -0.1%. Therefore, the GBP/JPY interest rate differential is 0.2%. It has a score of 4.

  • The differential in GDP growth rate between the UK and Japan

The GDP growth rate differential measures the difference between the UK and Japan’s average annual growth rate. This is an effective way of comparing two economies since all economies vary in size and composition.

When the GDP growth rate differential is positive, it means that the UK economy has expanded more than Japan. Hence, the GBP/JPY will be bullish. Conversely, if the differential is negative, Japan’s economy has expanded faster than the UK’s. Hence, the GBP/JPY pair will be bearish.

In the first three quarters of 2020, the UK economy has contracted by 5.8% while Japan contracted by 3.5%. The GDP growth rate differential is -2.3%. Thus, we assign a score of -3.

Conclusion

Indicator Score Total State Comment
The UK and Japan Current Account Differential -3 10 A differential of – $36.37 The UK has a current account deficit of $20.97 billion, while Japan has a surplus of $15.4 billion. This is expected to continue to widen as both economies recover from the pandemic
The interest rate differential between the UK and Japan 4 10 0.20% Both the BOJ and the BOE have no plans to change their monetary policies in the foreseeable future. This means the differential will remain at 0.2% in the short-term
The differential in GDP growth rate between the UK and Japan -3 10 -2.30% The UK economy contracted more than the Japanese economy. As economic recovery progresses, this differential could change
TOTAL SCORE -2

The cumulative score for the exogenous factors is -2. That means that the GBP/JPY pair is set on a bearish trend in the short-term.

Technical analysis of the pair shows the weekly chart attempting to break below the middle Bollinger band.

Categories
Forex Fundamental Analysis

GBP/JPY Global Macro Analysis – Part 1

Introduction

Introduction

Introduction

The GBP/JPY pair’s global macro analysis interrogates the endogenous factors that drive the GDP growth in the UK and Japan. The analysis will also cover exogenous factors that affect the exchange rate between the GBP and the JPY.

Ranking Scale

The analysis will use a sliding scale from -10 to +10 to rank the endogenous and exogenous factors’ impact. Endogenous factors impact the value of the domestic currency. Thus, when it is negative, it means that the domestic currency has depreciated. When positive, it means that the domestic currency has increased in value during the period under review. The ranking of the endogenous factors is based on correlation analysis with the domestic GDP.

On the other hand, a positive ranking for the exogenous factors means that the GBP/JPY pair’s price will increase. Conversely, when negative, it means that the price of the pair will drop. This ranking is derived from correlation analysis between the exogenous factors and the GBP/JPY exchange rate fluctuation.

GBP Endogenous Analysis – Summary

A score of -15 implies that GBP has depreciated since the beginning of this year.

Indicator Score Total State Comment
UK Employment Rate -5 10 75.2% in September 2020 Dropped by 1.4% from January to September. The labor market has shed around 551,000 jobs
UK Core Consumer Prices 2 10 109.82 points in November 2020 The UK core consumer prices have increased by 1.82 points since January. Shows that the demand in the domestic economy has not been depressed
UK Factory Orders 3 10 Was -25 in November The CBI trends orders are improving. The -25 recorded in November was the highest since February
UK Business Confidence -2 10 Neutral in Q4 of 2020 UK businesses are still pessimistic about the future operating environment.
UK Consumer Spending -5 10 Was £304.5 billion in Q3 2020 Q3 household expenditure shows domestic demand is recovering from the lows of Q2. Consumer spending is still below the pre-pandemic Q1 levels
UK Construction Output -2 10 YoY drop of 7.5% in October 2020 The construction output is improving, which implies that the UK economy is steadily recovering from the economic disruptions of the pandemic
UK Government Budget Value -6 10 UK public sector net borrowing deficit was £22.3 billion The growing budget deficit is a result of increased government expenditure in the wake of COVID-19 pandemic. Also worsened by reduced revenues due to business disruption
TOTAL SCORE -15
  • United Kingdom Employment Rate

The employment rate shows the percentage of the UK labor market that is actively and gainfully employed. It is a comprehensive representation of the growth in the labor market. Note that the changes in the employment rate measure the changes in the economic activities of a country.

In September 2020, the UK employment rate dropped to 75.2% from 75.3% in August. From January to September 2020, the employment rate has dropped by 1.4%, equivalent to about 551,000 job loss. The UK employment rate scores -5.

  • United Kingdom Core Consumer Prices

This index measures the change in the rate of inflation in the UK by tracking price changes of specific consumer products. The index calculation excludes items whose prices tend to be highly volatile, such as fuel and energy.

In November 2020, the core consumer prices in the UK dropped to 109.82 from 109.9 in October. The index has increased by 1.82 points since January. The UK core consumer prices score 2.

  • United Kingdom Factory Orders

In the UK, the CBI Industrial Trends Orders tracks orders from about 500 companies in 38 sectors of the manufacturing industry. The survey’s components include domestic goods orders, exports, inventory, output prices, and expectations of future investments and output levels. The surveyed manufacturers respond whether the current conditions are normal, above, or below normal. This is used as a leading indicator of industrial production.

In December 2020, the UK CBI trends orders were -25, 15 points up from -40 in November. This is the highest level since February 2020 but still lower than -18 in January. We assign a score of 3.

  • United Kingdom Business Confidence

This index gauges the optimism of businesses operating in the UK. A survey is conducted on 400 small, medium, and large companies to determine their optimism. The survey covers exports, output levels and prices, capacity, order books, inventory, competitiveness in the domestic market,  innovation, and training. The business sentiment is then ranked from -100 to +100, with 0 showing neutrality.

In the fourth quarter of 2020, the UK business confidence was neutral at 0, a slight change from -1 in Q3. It is, however, still below the 23 recorded in Q1. We assign a score of -2.

  • United Kingdom Consumer Spending

Expenditure by households contributes to a significant proportion of the domestic GDP. In the UK, this index tracks quarterly changes in the amount of money spent by households and Non-profit institutions serving households (NPISH). Note that when the economy is performing well, consumer spending is high. Conversely, a poorly performing economy corresponds to low consumer spending.

In Q3 2020, consumer spending in the UK rose to £304.5 billion from £258.3 billion in Q2. However, the Q3 expenditure is still lower than Q1. The UK consumer spending scores -5.

  • United Kingdom Construction Output

This economic indicator tracks the yearly change in the value of work done in the construction sector. The amount of money charged by construction companies in the UK is based on a sample of 8000 companies that employ over 100 employees. Note that in the UK, the construction sector contributes about 6.4% of the GDP.

In October 2020, the UK’s YoY construction output dropped by 7.5%, up for the 10% drop recorded in September. This marks the smallest decrease in the UK’s construction output since the pre-pandemic period. We assign a score of -2.

  • United Kingdom Government Budget Value

This indicator tracks the changes between the government’s revenues and expenditure. When the revenue exceeds the expenditure, it is a surplus and indicates that the economy is expanding. When the deficit is increasing, it means that the government is spending much more than it receives. This poses a threat of overburdening the economy with future debt repayment obligations.

In October 2020, the UK public sector net borrowing deficit was £22.3 billion. This is an improvement from the deficit of £28.6 billion in September. In January 2020, the UK had a surplus of £9.6 billion. Thus, we assign a score of -6.

In the next article, we have discussed the endogenous analysis of JPY currency to see how it has performed in the year’s due course. Make sure to check that out. Cheers.

Categories
Forex Signals

GBP/JPY Reverses Over Support – Doji & Bullish Engulfing in Play!

The GBP/JPY pair slipped to drop until 137.500 support level and has closed a Doji candle which is suggesting odds of bullish reversal in the market. On the 4 hour timeframe, the GBP/JPY pair has closed a Doji pattern which is suggesting that the sellers are exhausted and bulls may enter the market. On the higher side, the GBP/JPY pair can find resistance at the 138.687 level. Thus, we have decided to capture this move, and opened a signal with a stop loss at 137.46 and take profit of 138.36. Let’s keep an eye on the pair.

The GBP/JPY pair slipped to drop until 137.500 support level and has closed a Doji candle which is suggesting odds of bullish reversal in the market. On the 4 hour timeframe, the GBP/JPY pair has closed a Doji pattern which is suggesting that the sellers are exhausted and bulls may enter the market. On the higher side, the GBP/JPY pair can find resistance at the 138.687 level. Thus, we have decided to capture this move, and opened a signal with a stop loss at 137.46 and take profit of 138.36. Let’s keep an eye on the pair.

The GBP/JPY pair slipped to drop until 137.500 support level and has closed a Doji candle which is suggesting odds of bullish reversal in the market. On the 4 hour timeframe, the GBP/JPY pair has closed a Doji pattern which is suggesting that the sellers are exhausted and bulls may enter the market. On the higher side, the GBP/JPY pair can find resistance at the 138.687 level. Thus, we have decided to capture this move, and opened a signal with a stop loss at 137.46 and take profit of 138.36. Let’s keep an eye on the pair.


Entry Price – Buy 137.86
Stop Loss – 137.46
Take Profit – 138.36
Risk to Reward – 1:1.25
Profit & Loss Per Standard Lot = -$400/ +$500
Profit & Loss Per Micro Lot = -$40/ +$50
Fellas, now you can check out forex trading signals via Forex Academy mobile app. Follow the links below.
iPhone Users: https://apps.apple.com/es/app/fasignals/id1521281368
Andriod Users: https://play.google.com/store/apps/details?id=academy.forex.thesignal&hl=en_US

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Forex Signals

GBP/JPY on a Bearish Run – 61.8% Fibonacci Retracement in Play!

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GBP/JPY on a Bearish Run – 61.8% Fibonacci Retracement in Play! 

The GBP/JPY pair failed to keep its early-day bullish momentum and dropped well below the 137 level despite the upbeat market sentiment. However, the prevalent bearish sentiment around the currency pair could be associated with U.K. Housing Equity Withdrawal q/q figures, which fell from -4.5B to -7.7B mark, missing the economists forecast of -4.3B.

Besides this, the currency pair’s declines were further bolstered after the U.S. Secretary of State Mike Pompeo said Japan’s Prime Minister (PM) Yoshihide Suga would strengthen the relationship with the U.S. Thus, the Japanese yen got impressed by the above comments, which adds further downside pressure around the GBP/JPY currency pair. On the contrary, the market upbeat mood, backed by optimism over US President Trump’s health, could be considered one of the key factors that help the currency pair limit its deeper losses. 

At the US-China front, the renewed US-China tussle also keeps challenging the market risk-on mood, which might add further pessimism around the currency pair. As per the latest report, the Dragon Nation recently fueled the Sino-American tussle by criticizing the US ban on TikTok and WeChat at the World Trade Organization (WTO). 

Across the ocean, the currency pair losses got an additional boost after the US Secretary of State Mike Pompeo said Japan’s Prime Minister (PM) Yoshihide Suga is a ‘powerful force for good’, as well as Pompeo further added that he believes Suga will strengthen the relationship with the US.

These positive comments tend to underpin the Japanese yen currency and drag the currency pair lower.

The GBP/JPY has formed a sharp bearish a candle below 137.450 resistance area. Closing of candles below this leve suggests odds of a selling bias in the market, especially when the MACD has also formed a bearish crossover 


Doji candle over a resistance become support level of 1.3245, which signifies weakness in the selling bias. Simultaneously, the USD/CAD’s MACD is forming smaller histograms than before, and it’s an indication of a potential bullish bais. On the lower side, the GBP/JPY pair may drop until 136.500 that marks 38.2% Fibonacci retracement level and even below this until 61.8% Fibo level of 135.940 level. Good luck! 

Entry Price – Sell 136.89
Stop Loss – 137.29
Take Profit – 136.39
Risk to Reward – 1:1
Profit & Loss Per Standard Lot = -$400/ +$400
Profit & Loss Per Micro Lot = -$40/ +$40
Fellas, now you can check out forex trading signals via Forex Academy mobile app. Follow the links below.
iPhone Users: https://apps.apple.com/es/app/fasignals/id1521281368
Andriod Users: https://play.google.com/store/apps/details?id=academy.forex.thesignal&hl=en_US

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Forex Signals

GBP/JPY Succeeded to extend Bullish Bias Amid Faded Haven Appeal!

Today in the European trading session, the GBP/JPY currency pair successfully extended its previous session bullish trading moves and hit the two-weeks high around 135.70 marks mainly due to the on-going Brexit optimism, which eventually underpinned the Brtish Pound and contributed to the currency pair gains. Apart from this, the currency pair got an additional boost after the Bank of England (BoE) policymaker reduced the possibility of negative interest rates in the short-term, which also benefitted the British Pound and extended further support to the currency pair.

Today in the European trading session, the GBP/JPY currency pair successfully extended its previous session bullish trading moves and hit the two-weeks high around 135.70 marks mainly due to the on-going Brexit optimism, which eventually underpinned the Brtish Pound and contributed to the currency pair gains. Apart from this, the currency pair got an additional boost after the Bank of England (BoE) policymaker reduced the possibility of negative interest rates in the short-term, which also benefitted the British Pound and extended further support to the currency pair.

Today in the European trading session, the GBP/JPY currency pair successfully extended its previous session bullish trading moves and hit the two-weeks high around 135.70 marks mainly due to the on-going Brexit optimism, which eventually underpinned the Brtish Pound and contributed to the currency pair gains. Apart from this, the currency pair got an additional boost after the Bank of England (BoE) policymaker reduced the possibility of negative interest rates in the short-term, which also benefitted the British Pound and extended further support to the currency pair.

Let me remind you that the combination of factors helped the currency catch some aggressive bids on the 2nd-day of a new trading week and build on last week’s modest bounce from the lowest level since early July 133.00 marks. Across the pond, the strong rally in the equity markets, backed by the combination of factors, undermined the safe-haven Japanese yen and gave a further boost to the GBP/JPY currency pair.

Despite concerns about the coronavirus cases in some notable nations and worsening US-China relations, the investors continued to cheer the hopes of the US fiscal stimulus package triggered by reports suggesting that the US Democrats’ showed a willingness to alter previous proposals while saying that the deadlock over the much-awaited stimulus talks seems to break anytime. This, in turn, boosted the market trading sentiment and extended support to the currency pair.

Moreover, the upbeat market sentiment was being supported by optimism over the coronavirus vaccine, which came after the US pharmaceutical giant Johnson and Johnson Inc COVID-19 vaccine trial has shown a strong immune response to the coronavirus with a single dose in the early trial stages.

The UK and EU are ready to resume the 9th and final phases of Brexit talks on the day across the pond. Reports suggest that negotiators will start the process to finalize a deal by the end of this week to hammer out an agreement in time for the next EU summit in mid-October. However, the hopes of a Brexit deal were further fueled after the EU steps back from warnings to leave trade and security talks, shows a willingness to prepare a joint legal agreement. (WAB). This, in turn, boosted the sentiment around the British Pound and extended further support to the currency pair.

Looking forward, the market traders will keep their eyes on headlines concerning Brexit, pandemic, and the US Presidential Election, which may offer important clues on the day. It’s worth mentioning that the 1st-round of the US President Election debate is expected to use American President Donald Trump’s tax payments as a fresh obstacle, which may push the US dollar down.


The GBP/JPY pair has formed bullish engulfing candles on the 4-hour timeframe, suggesting a bullish bias around 135.150. The recent bullish crossover of 135.100 levels is likely to lead the GBP/JPY price towards 136.400 levels. On the further higher side, the bullish crossover of 136.400 level will make our forex trading signal more secure, and it can lead GBP/JPY price towards 139.900 level. Check out a trading plan below…

Entry Price – Buy 136.056
Stop Loss – 135.656
Take Profit – 136.456
Risk to Reward – 1:1
Profit & Loss Per Standard Lot = -$400/ +$400
Profit & Loss Per Micro Lot = -$40/ +$40
Fellas, now you can check out forex trading signals via Forex Academy mobile app. Follow the links below.
iPhone Users: https://apps.apple.com/es/app/fasignals/id1521281368
Andriod Users: https://play.google.com/store/apps/details?id=academy.forex.thesignal&hl=en_US

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Forex Signals

GBP/JPY Supported Over Upward Trendline – Buy Signal Update

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Entry Price – Buy 138.883
Stop Loss – 138.383
Take Profit – 139.383
Risk to Reward – 1:1
Profit & Loss Per Standard Lot = -$400/ +$400
Profit & Loss Per Micro Lot = -$40/ +$40

Fellas, now you can check out forex trading signals via Forex Academy mobile app. Follow the links below.

iPhone Users: https://apps.apple.com/es/app/fasignals/id1521281368

Andriod Users: https://play.google.com/store/apps/details?id=academy.forex.thesignal&hl=en_US

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Forex Signals

GBP/JPY Supports Over Upward Trendline – 138.600 Level Eyed! 

During the Friday’s European trading session, the GBP/JPY extended its previous session losing streak and dropped below the 138.600 marks mainly due to the risk-off market sentiment, triggered by the multiple worsening headlines like dismal U.S. jobs data and US-Iran tussle. This eventually underpinned the safe-haven Japanese yen currency and contributed to the pair declines. 

During the Friday’s European trading session, the GBP/JPY extended its previous session losing streak and dropped below the 138.600 marks mainly due to the risk-off market sentiment, triggered by the multiple worsening headlines like dismal U.S. jobs data and US-Iran tussle. This eventually underpinned the safe-haven Japanese yen currency and contributed to the pair declines. 

During the Friday’s European trading session, the GBP/JPY extended its previous session losing streak and dropped below the 138.600 marks mainly due to the risk-off market sentiment, triggered by the multiple worsening headlines like dismal U.S. jobs data and US-Iran tussle. This eventually underpinned the safe-haven Japanese yen currency and contributed to the pair declines. 

At this moment, the GBP/JPY is trading at 138.600 and consolidating in the range between 138 – 139.90. The U.S. stock futures failed to maintain its early-day gains and turned negative, possibly due to the on-going political impasse over the shape and size of the next U.S. fiscal recovery package. The disappointing U.S. labor market data also exerted downside pressure on the market by fueling the worries over the U.S. economic recovery. At the data front, the U.S. showed that 1.106 million Americans declared unemployment benefits during the previous week, exceeding the anticipated 925,000 claims as well as last Thursday’s 971,000 figure. 

The U.S. House Speaker Nancy Pelosi stepped back from her previous positive remarks over the COVID-19 relief bill while saying that the “Timing is not right for a smaller coronavirus relief bill.” This, in turn, undermined the risk-tone in the market. Also weighed on the market trading sentiment was the US-Iran tussle. Trump administration remains tough and adds worries for Iran after showing the intention to restore almost all United Nations (U.N.) sanctions. As per the latest report, U.S. Secretary of State Mike Pompeo announced that we will strongly push arms embargo and do everything to enforce them. These gloomy headlines weighed on the market sentiment and contributed to the currency pair losses by underpinning the safe-haven Japanese yen.

Apart from this, the fears of rising COVID-19 cases in the U.S., and some of the notable Asian nations like India constantly fueling fears that the economic recovery could be halt, which also underpinned demand for the Japanese yen and kept the currency pair down. However, these fears were further boosted by the Federal Reserve’s Wednesday’s comments that the path to economic recovery from COVID-19 remains highly uncertain. 

The reason for the risk-off market sentiment could also be attributed to the latest U.S. rump administration statement against the Chinese commerce department’s comments that trade talks will happen soon. The Trump administration did not goes with the comments made by the Chinese Commerce Dept. spokesman Mr. Gao Feng that trade talks will resume in the coming days. However, the reason could be the long-lasting tension between both parties, leading the U.S. president to be angry with China. 


During the early U.S. session, we opened a forex trading signal on the GBP/JPY currency pair at 138.900 level with a stop loss at 138.550 level. But soon, we realized that the pair isn’t likely to reverse over 138.800 support. Therefore, we decided to close the signal at a minimum loss of 9 pips. Let’s wait a bit before taking another p[osition in the GBP/JPY currency pair. Good luck! 

Categories
Forex Signals

GBP/JPY Breaks Upward Trendline – Quick Update on Trade Setup! 

The Japanese cross pair GBP/JPY is trading sharply bearish amid weaker GBP and firmer JPY. The safe-haven pair has already violated upward trendline support 139.490, and now the same level is working as a resistance. The GBP/JPY may gain support and bounce off soon. 

The Japanese cross pair GBP/JPY is trading sharply bearish amid weaker GBP and firmer JPY. The safe-haven pair has already violated upward trendline support 139.490, and now the same level is working as a resistance. The GBP/JPY may gain support and bounce off soon. 

The Japanese cross pair GBP/JPY is trading sharply bearish amid weaker GBP and firmer JPY. The safe-haven pair has already violated upward trendline support 139.490, and now the same level is working as a resistance. The GBP/JPY may gain support and bounce off soon. 

The GBP/JPY currency pair extended its previous session, losing streak, and dropped further below 139.078 marks, mainly due weakness in the GBP. The upbeat market sentiment, backed by the optimism over a potential vaccine for the highly infectious coronavirus, undermined the safe-haven Japanese yen and helped currency pair to limit its deeper losses. 

In the meantime, the downbeat preliminary readings of Japan’s second quarter (Q2) Gross Domestic Product (GDP) also undermined the safe-haven Japanese yen currency and became one of the major factors that capped further downside for the currency pair.  

Despite concerns about the ever-increasing coronavirus cases across the world and worsening US-China relations, the investors continued to cheer the optimism over a potential vaccine for the highly contagious coronavirus disease. Also, supporting factors could be the suspension of the US-China online meeting regarding the trade deal. It is worth mentioning that the meeting was initially scheduled for Saturday while the delay leaves the phase one deal intact, for the time being at least.

On the contrary, the fears of growing COVID-19 cases in the U.S., Australia, Japan, and some of the notable Asian nations like India continually fueled doubts about economic recovery. As per the latest report, France recorded more than 3,000 new cases for the second day while Australia’s state Victoria marked the highest death loss, which resulted in an extended state of emergency until September 13. As well as, Singapore also reported 86 cases on the weekend. At the same time, New Zealand imposed fresh lockdowns after recording increased cases of Covid-19. However, these gloomy updates kept challenging the market risk-on tone, which might weaken the safe-haven JPY and help limit losses for the major.

Apart from the virus woes, the long-lasting tussle between the world’s two largest economies remained on the cards as China’s ambassador to the U.S. recently gave warning against the U.S. move to send ships to the South China Sea, which could raise further tensions between both nations and harm the trade deal. Whereas, President Trump announced yesterday that TikTok should give its U.S. operations to another company within one-month, or it will be banned in the U.S. due to significant security threats. In return, China’s Foreign Ministry recently said on the day that it would firmly oppose to U.S. actions.


Technically, the GBP/JPY pair was gaining support at 138.950 level, and I was suspecting if the pair will be able to hit our take profit. Therefore, we decided to close our forex trading signal beforehand at 139.002, securing 34.7 pips as we opened it at 139.348. For now, the pair is staying at 139.07 level, and closing of candles above 138.925 is supporting selling bias in the pair. Good luck! 

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Forex Basic Strategies

Learning To Trade The GBP/JPY Pair Using The ‘Guppy Burst’ Strategy

Introduction

Introduction

Introduction

After discussing some of the intraday and long-term trading techniques, we will now focus on very mechanical trading strategies. The strategies discussed previously were time-driven, which means each strategy involved several parameters.

This style of trading is suited to newbies because it is purely based on a fixed set of rules and steps. Due to its non-dependence on rules specific time frames, the strategies we will be discussing span over three different categories: scalping, day trading, and position trading.

The first strategy is the guppy burst strategy, which is based on the 5-minute chart. The second strategy is English Breakfast Tea, which is based on the 15 minutes chart, and the third strategy we will talk about is the good morning Asia strategy, which is based on the daily chart.

The guppy burst strategy seeks to exploit trading profits when the market is quiet. One would have observed that the market is least volatile after the U.S. market’s close until the Asian market opens. The forex market is quiet during this time and tends to move gently. However, the market movement during this time is fairly predictable. The market again momentum after the Asian market opens.

Time Frame

The guppy burst strategy works well on the 5-minute time frame. This means each candle represents 5 minutes of price movement.

Indicators

This strategy is based on pure price action; hence, no indicators are required for this strategy.

Currency Pairs

This strategy applies only to the GBP/JPY currency pair.

Strategy Concept

Firstly, we identify a ‘range’ during the window of three hours between the close of the U.S. market and the opening of the Asian market. We are also taking advantage of the volatility that is witnessed when the opening of the Asian market is nearing. We will place a pending buy order at the range’s resistance with a stop loss at the support.

Similarly, we will place a pending sell order at the support of the range with a stop loss at the resistance. This might appear opposite for some traders who are well versed with the support and resistance strategy. The reason behind buying at resistance and selling at support is that, as soon as the Asian market opens, the market starts to trend in the same direction of the current move. This means we are anticipating a breakout or a breakdown of the range.

We will have two take-profit points in this strategy. The first profit target is set at risk to reward ratio of 1:1.5, while the second one is at 1:2 risk to reward. By this, we ensure that we lock in some profits and don’t lose when the trade goes against our favor.

Trade Setup

Since the time zone of the trade very important here, we need to mark the reference candle for the strategy. It is the one that corresponds to 5 PM New York time, which is nothing but the closing time of the U.S. market. As mentioned earlier, the strategy is applicable only to the GBP/JPY currency pair. Here are the steps of the guppy burst strategy.

Step 1

The first step is to open the chart of the GBP/JPY currency pair and then wait for the U.S. market to close. Mark this as the reference candle, and from here, the analysis of the chart begins. We need to analyze the pair on the 5 minutes candlestick chart. The below image shows an example of such a trade setup on the GBP/JPY pair. Here we see that the market is an uptrend and recently has formed a range.

Step 2

Next, we need to identify a ‘range’ where we have at least two points of support and resistance. We have to assure that the market does not start moving in a single direction after the U.S. market closes. If it does, then the strategy is no longer valid. However, the market mostly remains sideways after the U.S. session. Depending on the market’s major trend, we place a limit order at support and resistance. If the major trend of the market is up, we place the ‘buy’ limit at the resistance, and if the major trend is down, we place the ‘sell’ limit at the support.

Step 3

In this step, we do not have to do anything, but just wait for the market to hit our limit orders. At the same time, if our limit order is not triggered, we should leave the market as it is and not chase it. This is an important part of risk management.

In the below image, we see that our ‘buy’ order gets triggered a few minutes after the opening of the Asian market.

Step 4

As mentioned earlier, we have two ‘take-profit’ points for the strategy. The stop-loss placed at support if going ‘long’ in the market and at resistance if going ‘short.’ The first ‘take-profit’ is set at a point where the resultant risk to reward of the trade is 1:1.5. The second ‘take-profit’ is set at 1:2 risk to reward. We lock in some profits at the first profit target, which ensures that we don’t lose money even if the market turns around.

The below image shows how the market continues to move upwards and starts trending after the breakout from the range.

Strategy Roundup

As we are not sure when the breakout will happen, the best way to enter the market is by creating a pending order on the extreme ends of the range. The important part is the identification of the range during the three-hour window between the U.S. market close and Asia market open. Along with that, make sure to place a limit order in the direction of the market.

Categories
Forex Signals

GBP/JPY Breakout Symmetric Triangle Pattern – Quick Update on Signal!

Entry Price – Buy 134.389

Entry Price – Buy 134.389

The GBP/JPY currency pair has performed well as it violated the symmetric triangle pattern at 134.470 level, and since this, the bullish run seems unstoppable. It seems the Japanese yen is losing safe-haven appeal despite COVID19 hit. Due to an increased second wave of coronavirus, officials in Spain re-imposed restrictions in the north-western region of Spain with 70,000 people and allowed only workers to leave or enter the coastal district of A Marian.

On the other hand, An Oxford Professor, Dr. Tom Jefferson from the Centre for Evidence-Based Medicine (CEBM) said that rather than originating in China, the coronavirus might have been lying dormant until favorable environmental conditions emerged.

A preprint study claimed that they found the SARS-CoV-2 genomes in a Barcelona sewage sample from 12th March 2019. Traces of COVID-19 were also found in sewage samples from Spain, Italy, and Brazil, which pre-date its finding in China.

However, this news was based on unchecked facts but still weighed on risk sentiment and called for safe-haven demand as the fears increased that COVID-19 was present across the world and could emerge again. The safe-haven Japanese Yen gained and added the GBP/JPY pair’s downward pressure on Tuesday.


The RSI and MACD are still in a bullish zone, while the 50 EMA also suggests a bullish bias. Therefore, we should look for buying trades over 134.389 levels. It seems like a good opportunity to capture quick 40 pips as the symmetric triangle pattern is already violated and may drive buying until 134.789

Entry Price – Buy 134.389

Stop Loss – 133.989

Take Profit – 134.789

Risk to Reward – 1

Profit & Loss Per Standard Lot = -$600/ +$600

Profit & Loss Per Micro Lot = -$60/ +$60

Categories
Forex Market Analysis

Daily F.X. Analysis, February 14 – Top Trade Setups In Forex – Brace for U.S. Retail Sales!  

On Friday, the market awaits U.S. economic events, which are expected to drive some price action during the U.S. session today. The U.S. Commerce Department will report January retail sales (+0.3% on month expected) and December business inventories (+0.1% expected). 

On Friday, the market awaits U.S. economic events, which are expected to drive some price action during the U.S. session today. The U.S. Commerce Department will report January retail sales (+0.3% on month expected) and December business inventories (+0.1% expected). 

On Friday, the market awaits U.S. economic events, which are expected to drive some price action during the U.S. session today. The U.S. Commerce Department will report January retail sales (+0.3% on month expected) and December business inventories (+0.1% expected). 

The Labor Department will post the January import price index (-0.2% expected). The Federal Reserve will release January industrial production (-0.2% expected) and capacity utilization (76.8% expected). The University of Michigan will report its Consumer Sentiment Index for February (99.4 expected).

Economic Events to Watch Today 

 

 

EUR/USD – Daily Analysis

The EUR/USD dropped 0.3% to 1.0842, the lowest level since April 2017. Later today, the eurozone’s fourth-quarter GDP growth will be reported (+1.0% on-year expected)

The money markets are currently pricing approximately 6-basis points of a rate cut by the end of 2020, against a zero probability seen a month earlier. On the other hand, the EUR/USD currency pair may find some bids if the German data prints better-than-expectations. Whereas, the technical bias will remain bearish until the pair does not reach above the 10-day Moving average at 1.0940.

Traders are currently waiting for the German data to take new positions. The market will also keep their eyes on Italian Trade Balance and Flash Employment Change for taking fresh cues.

Later today, official reports on January retail sales (+0.3% on month expected), industrial production (-0.2% on month expected), and the University of Michigan consumer sentiment index (February preliminary reading, 99.4 expected) will be released.

Daily Support and Resistance

  • S1 1.0767
  • S2 1.0828
  • S3 1.0851

Pivot Point 1.0888

  • R1 1.0911
  • R2 1.0949
  • R3 1.1009

EUR/USD– Trading Tips

The EUR/USD fell dramatically to trade around 1.0841 support level, and it seems to form a Doji candle today, perhaps due to a lack of trading volume and liquidity. If this happens, we may see the bullish trend in the EUR/USD pair in the week ahead. At the same time, if the EUR/USD pair manages to drop below 1.0840, we may see EUR/USD prices going towards 1.0760. Let’s look for buying trade today above 1.0840. 

GBP/USD– Daily Analysis

The GBP/USD rose 0.7% on the day to 1.3046. U.K. Chancellor Sajid Javid has resigned from his position, and his deputy Rishi Sunak will succeed him. Investors speculated that this might pave the way for more fiscal stimulus.

On the other hand, the fears of coronavirus are decreasing and supporting the risk recovery. As a result, the U.S. 10-year Treasury yields stay modestly down to 1.61% while stocks in Asia are marking a recovery from Thursday’s declines.

Looking forward, the lack of U.K. data will push the cable traders to keep eyes on political/Brexit headlines, as well as coronavirus update. However, the U.S. Retail Sales and Michigan Consumer Sentiment Index will entertain the momentum traders during the later part of the day.

The GBP/USD broke above 1.2950 resistance level, which is now looking to test the next resistance around 1.3045. The following support level is likely to be found around 1.2950 for now. 

Daily Support and Resistance

  • S1 1.2888
  • S2 1.2928
  • S3 1.2944

Pivot Point 1.2968

  • R1 1.2984
  • R2 1.3008
  • R3 1.3047

GBP/USD– Trading Tip

On the 4 hour timeframe, 1.3000 is the most crucial level for the GBP/USD as a violation of this level can lead Sterling prices further higher towards 1.3045 and 1.3065 in the coming week. 

The MACD and RSI are holding in the buying zone, supporting bullish bias for the GBP/USD pair. Let’s look for bullish trades above 1.3000 today. 

USD/JPY – Daily Analysis

The USD/JPY slid 0.3% to 109.75. The USD/JPY is struggling to keep their gains ahead of key U.S. data and looking toward fresh developments in the coronavirus. The USD/JPY trades around at 109.78 and consolidates in the narrow range between the 109.76 – 109.87.

According to the news from China Health Commission, the epicenter Hubei province reports 4,823 new cases on the second day of using the new diagnosing method. The number of people is in severe and critical condition, and the number rose to 9,638 from the prior figures of 7,084.

It should be noted that China’s President Xi Jinping told on Thursday that the government’s struggles are starting to have positive effects on the Chinese economy.

It is worth to mention:

1: Reports 116 new deaths.

2: Total confirmed cases rise to 51,986.

3: Number of people in serious and critical condition 9,638, from 7,084 yesterday.

4:Around the globe, a total of 65,236 cases, 1,487 deaths.

As in result, the U.S. 2-year Treasury yields initially extended the reaction to the coronavirus news to 1.39% before rebounding to 1.44%, which is where they were pre-news. 10-year yields similarly fell to 1.57% before recovering to 1.62%. 

Daily Support and Resistance

  • R3: 110.63
  • R2: 110.33
  • R1: 110.21

Pivot Point 110.02

  • S1: 109.9
  • S2: 109.71
  • S3: 109.4

USD/JPY – Trading Tips

On Friday, the USD/JPY pair hasn’t changed much as it continues to trade with in the same trading 110.025 – 109.500. Apparently, it is due to a lack of economic events, but we may see movement during the U.S. session on the release of U.S. Retail Sales data. At the moment, the USD/JPY pair is holding below 110 resistance as it failed to violate the horizontal resistance level of 110.025.

In case, the USD/JPY manages to break above 110.025 level; we may see USD/JPY prices going towards 110.350 at first and then towards 110.850. Alternatively, the USD/JPY can drop to 109.300 in case of failure to break above 110.025. 

All the best for today!