GBP/JPY – Potential Negative Rates & Safe Haven Flows

Good day traders and welcome back to another article from AspireFX. Today we will be going over the current themes effecting GBPJPY as well as the technical analysis.

WEEKLY TIMEFRAME

Looking at the weekly timeframe, we see a bearish marubozu the prior week closing back below the psychological key level of 130.000. Upon the opening of the market we saw a slight gap to the downside, however price has made a pullback towards our area of resistance annotated “3 JAN MARKET CRASH”. With the prior weekly closure we anticipate bearish momentum to continue down into 127.500, however we have reached a support area on the weekly timeframe.

DAILY TIMEFRAME

On the daily timeframe we can see price broke to the downside on Friday and we have had a retracement into prior support regions now acting as resistance. 131.000 is a major support level for price to remain below. Price is swinging to the downside creating lower lows and lower highs. We can also see a head and shoulder pattern which has played out and seen a continuation since. Let’s take a look at the 4 hour timeframe for a clearer picture.

4 HOUR TIMEFRAME

On the 4 hour timeframe, we can see the lower lows and lower highs a lot clearer. Price has spiked into the 78.6 reaching highs of the prior bodies and is now closing below the trend line forming a doji. Price appears to be slowing down and a potential reversal is in play.

1 HOUR TIMEFRAME

On the 1 hour timeframe, we can see a fake-out of the trend line, enticing buyers into the market. Shortly after price reversed and came back below the trend line confirming the 3rd touch and we now anticipate a rollover in price. Price failed to make a new higher high and the downtrend looks to continue. We formed a double doji followed by a bearish engulfing. Let’s look at the 15 min for where we could’ve executed a precise entry.

15 MINUTE TIMEFRAME

On the 15 minute timeframe we have a prior level of resistance which lines up with multiple confluences. Taking a look at fundamentals , we have seen a stalemate in Brexit negotiations however the EU realises its hard stance on Brexit isn’t realistic or positive. Should we see a softer tone from the EU, this will be positive for the Pound. Another key factor to take into account is the possibility of negative rates coming from the Bank of England which would be negative for the Pound. The developments on these two pieces will be interesting to see. After the rally in the gold market seen from the open, we then saw an exit out of gold as headlines came announcing seemingly positive results from a vaccine trial from the company Moderna. Stocks also received a boost on this as well as the announcement of further quantitative easing.

Looking at the economical calendar, we have the UK unemployment rate tomorrow , Wednesday we have CPI and PPI data. We also have Gov. Bailey speaking in the afternoon. Thursday we have flash services PMIs and Friday we have retail sales, so it is a jam packed week, full of news for the Pound. We also look to see developments from the FED to gauge whether or not safe havens will continue to soar higher.

As always, have a great trading week further and trade safely.

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