khansalarehsan
Long

A medium to long-term Bullish view on GBPJPY

FX_IDC:GBPJPY   British Pound / Japanese Yen
Dear Friends

It has been a while that I have not had a detailed review of a pair and it was just signals sent out.
In this review I would like to investigate a medium to long term plan for trading GBPJPY             .
I am bullish on this pair and here are the reasons that I think YEN will depreciate and Sterling will appreciate.


If you liked this analysis please do not forget to LIKE it or leave a COMMENT. Thank you …


First let’s review the reasons that I am long on YEN.

1) Here is the monthly weighted average YEN which shows how storng YEN is in compare to other 7 major currencies.




see how all 2018 it has been trying the break the upper band of the wedge formation and could not. September candle has been closed very bearish after have Aug candle making a false breakout of the highs. So this is a very bearish chart and if you count you can see three attempts to go higher all failed.

Looking at the weekly chart is it also very bearish with the last week of SEP closed as a bearish inside bar below the major resistance level .



and on the daily it broke the support level and made two attempts to go higher and could not and closed the Friday as a bearish candle. You can see how the last a few days YEN has been trading below the major 2018 support level and could not reverse inside the previous channel.



To replicate weighted average please see the screenshot title.

2) Nikkei is negatively correlated with FX. Below is the Monthly NIKKEI line chart and see although FX has been trapped in a range all 2018 but NIKKEI has just closed SEP very bullish .


On the weekly you can see how the last week of SEP broke 1989 falling trend line at 23794 and closed at 2412.



The only things that I do not like about the above chart is that the break is not substantial but I have plenty of other charts that shows YEN is really bearish .

3) Next chart is Japanese YEN             Yields and negative correlation is expected. See how on weekly chart made a classic break of the upper band of the wedge and hold above that as the upper band acted a support and see how it is heading higher.



Line chart looks even better



4) Japanese Bonds is the last market and positive correlation is expected. This one even could not get back to the resistance as the selling pressure it was too high. So bearish on Bonds means bearish on YEN.



Next let’s review why I am bullish on Sterling.

1) See how it bounced in AUG off the rising trend line and I expect this to continue particularly as EMAs hold it in week 3 of SEP and just last week it bounced off the EMAs.



Zooming in we see how Sterling trapped between these two dotted lines supports and resistance.



It is likely Sterling to reach the support before heading higher again but looking at a very shorter Time Frame we have a pitchfork that suggest that Sterling may go higher from here as it respected the lower band of the Modified Schiff Pitchfork .



2) Bonds are negatively correlated with FX. See how Bonds have unfinished business after the breakout of the key support level . I expect this market to reach the rising trend line . The lower the bonds go the higher GBP goes.



3) Gilts are the same as Bonds. Unfinished business for Gilts too. See how it has been falling for the last a few weeks. Have we seen this much bullishness in Sterling. NO…!



4) Yields are positively correlated with FX. This market is also has not reached the mid band of the pitchfork yet.


5) Last market if FTSE             and we expect an opposite correlation.

See how it touched the mid-band of the old channel and a pullback is expected.




Finally let’s review GBPJPY            

1) See how on Monthly chart it made 3 attempts to get off the EMAs and go higher. It could not


2) On the daily see it broke the major falling red trend line and bounce off that. I have Fibo overlaps as targets.



I am bullish on this pair as I am bearish on Yen and Bullish on Sterling.

I hope you enjoyed this analysis.
Do not forget to hit the LIKE bottom if you enjoyed and leave a COMMENT.

Many thanks friends,
KHAN



Comment: A big gap lower in YEN as expected

Very comprehensive analysis Mr Khan, thank you for your work and for sharing this insight with us.

With this as your medium to long term view it looks like already at the start of trading today that GBPJPY is on track with your estimations.

Do you feel your target of 156.6 over the next 3 months could mean at least 148.7 today as it is already up .12% and 18pips?

With many thanks.

Reply
MattyMatt MattyMatt
@MattyMatt, My question has been answered with 148.87 on screen now. Thank you Mr Khan.
Reply
Thank you Mr #KHAN. a very detailed analysis.
Reply
@khamis12, Cheers mate, thanks
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