2022/09/12 (067) Technical Analysis – XAUUSD & GBPJPY

GBPJPY long 4XSetUps Trading Capability,
Based On A Long-Term Trend-Reversal In The UK!
And That With Support Of Both Monetary Policymakers…


The GBPJPY Pair Recovered Significantly Over The Past Calendar Week

Already last weekend I had the GBPJPY exchange rate in mind to formulate a long 4XSetUps. But I didn’t dare. Nevertheless, the 165 GBPJPY level has to be left behind in the course of the first trading day for us bulls. So we confirm the break out of the 100SMA this week. And next week we might then be able to focus on the break out of the 168 GBPJPY price zone. But nothing so fast, my dear readers. Even if we only move towards 170 GBPJPY in October, the chart still looks good. Because we have been moving, more or less, in a healthy sideways trend channel since April. What was something of a resistance zone in January, February and/or March, at around GBPJPY 158, has been a robust support zone since the end of May and beginning of June. So short-term bear days – after 1.2 days, even better after 2.3 days – can still be seen as a buying opportunity.

I am assuming that the Bank of England will have to organize one of their largest spreads over the course of the year over the Bank of Japan; wants to be organized; will be organizing; to keep UK domestic inflation in check. Which is currently even in the double-digit range. Hence, it is also more than likely that many arbitrage hunters will enter the market. But first, new highs for the year have to be traded. Then the 170 GBPJPY level will be attacked. To then build on that to manifest a trend reversal formation above the current sideways trend. The 165 GBPJPY level is the start of a significant resistance that extends to the 168 GBPJPY level. And that we will simply leave the level behind us these weeks, let alone next week? I’m not assuming that! This long 4XSetUp has a time horizon into Q2 2022. So I assume that we will leave the GBPJPY level of 168.50 GBPJPY at the end of September, beginning of October, so in 3 to 4 weeks! If any?

Let me inform you that, on the one hand, the GBP has weakened relatively sharply against all major currencies. Both weakness against the USD and EUR, as well as against the AUD, CAD and/or CHF, has been demonstrated in the last few days and weeks. And on the other hand, the BOJ (Bank of Japan) is a significant factor in this GBPJPY exchange rate pair. Because the Bank of Japan continues to buy unlimited bonds to keep interest rates at home traditionally low. And it can, due to modest inflation in Japan. So that we are, for 2023 (and possibly maybe longer), in an environment where one currency’s central bank will be blatantly raising interest rates while the other central bank is embarking on blatant quantitative easing. A great rare one five times long promising 4XSetUp.Further Up Moves Are Possible In The GBPJPY Pair
Because The The Technical Chart Picture Looks Promising For Us Bulls
But It All Depends (At Least For Today) On The New Economic Data Out Of The UK

The cross-currency pair is defending the upside break of a 3-month-old resistance, now supported around 164.15. Not only the breakout of the key resistance but also the MACD bullish signals favor GBPJPY bulls to plot further advance towards the crossing of a 10 week old horizontal resistance area around 166.30. 

The GBP/JPY pair surpassed the 100SMA (162,845 GBPJPY) in the last calendar week and is currently also trading above the 20SMA (163,042 GBPJPY). So that low prices, during the week, can be perceived as buying opportunities for bulls. Because the 3 lows (just below the 100SMA and or also above the 200SMA; which is currently at 159.66 GBPJPY) are to be understood as bullish in the short term; since they prove a relative willingness to buy from us market guys in this price zone.Not only the breakout of the key resistance but also the MACD bullish signals favor GBPJPY bulls to plot further advance towards the crossing of a 10 week old horizontal resistance area around 166.30. However, it should be noted that the pair’s move higher beyond 166.30 will not hesitate to challenge the year high around 168.50. During the anticipated run-up, the highs made in late June and April around 167.85 and 168.40 respectively could act as a buffer. On the downside, GBP/JPY sellers might not risk fresh entry until witnessing a clear downside break of the resistance-to-support line around 164.15 and the 164.00 line.

Remeber, GBPUSD Strengthens To 1.16 And/Or The FTSE 100 Rises For 2nd Session, On Friday (Last Trading Day)

Equities in London advanced for a second session on Friday, with the benchmark FTSE 100 rising above the 7,350 level, helped by heavyweight materials shares. The index finished the week on a high note, adding more than 1% after a few roller-coaster sessions that saw the announcement of the country’s new Prime Minister Liz Truss regarding the ongoing energy crisis and a historic 75 bps hike from the ECB. Meanwhile, Queen Elizabeth, Britain’s longest-reigning monarch, died at her home in Scotland on Thursday. Big miners Anglo American and Antofagasta were among the top gainers, up roughly 5% each.

The sterling gained almost 1% to $1.16 on Friday, after falling to 1985-lows of $1.14 in the previous session, amid a pause in the dollar rally as central banks around the world and specially the ECB adopt a more hawkish tone and deliver jumbo rate hikes. Domestically, investors continue to digest the new energy plan to tackle soaring energy costs, although some scepticism holds and doubts persist on how the bill would be funded, at a time the UK is battling soaring inflation, a widening trade deficit and recession prospects. At the same time, the death of Queen Elizabeth raised some anxiety on the country’s political situation.