Bears Circle GBP/JPY For Another Shot At The Lows

Since falling over 8% from its YTD highs, bears have allowed GBP/JPY to consolidate for 8 sessions. Yet its reluctance to drag itself convincingly from the lows leaves a potential bear flag to keep an eye on.

With the recent bouts of risk-off sentiment along with political woes and Brexit concerns for the UK, it’s no major surprise to see GBP/JPY under such heavy selling pressure. And, as noted in Monday’s COT report, the British pound has seen a pickup of short bets and closure of longs, whilst traders are now the least bearish on the Japanese yen in 3-months. So whilst some could argue that GBP/JPY is technically oversold, traders remain positioned for further downside and headline risks could still cap any upside.

We can see on the daily chart that GBP/JPY has fallen over 8% from its year to date high and broken out of a topping pattern early May. After reaching 136.53, its lowest level since the flash-crash, the bears have been kind enough to allow GBP/JPY to consolidate for 8 sessions and drift higher within a potential bear-flag. Whilst this allows for another cycle higher, we’re on the lookout for bearish momentum to return the cross to its dominant, bearish trend.

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account