GBP/JPY – Covid-19 Vaccine Updates & More

Good day and welcome back to another article traders. Today we are going to be providing an update on the prior article on GBPJPY and what we can expect next.

4 HOUR TIMEFRAME

In our prior article, we anticipated a move lower seeing a rejection on the 3rd bounce of the trend line and our favoured fibonacci levels. Price was also creating lower lows and lower highs and had retested prior swing low as resistance.

We had many confluences to look for shorts however as mentioned 131.000 would be a major level for price to remain below.

1 HOUR TIMEFRAME

Taking a look at the 1 hour timeframe, we can see price broke back above the trend line shortly after the rejection and held as support. After the daily closure, we saw an hourly close above the prior mentioned level of 131.000. The break and retest of the trend line and level of support allowed a wave of buying into the next psychological key level of 132.500 with pin point precision.

What caused the upside move ?

A company by the name of Moderna had seen early results from a vaccine trial showing positive results with participants developing antibodies against the virus. The recent announcement of this caused optimism in the stock markets and a flight out of safe havens, boosting GBPJPY higher, with JPY classifying as a safe haven currency. If studies continue with these positive remarks, we may see access to the vaccine by January next year.

This is not the only company with a potential vaccine, Gilead’s Remdesivir is another option seeing optimistic praise. Accompanying this news, we also saw a potential softer tone from the EU with regards to Brexit.

FRESH PERSPECTIVE :

4 HOUR TIMEFRAME

On the 4 hour timeframe, we have seen an extended move into the 78.6 fibonacci level as well as a wick into 132.500. Price is still creating lower lows and lower highs . A daily close above 132.400 would invalidate this move to the downside.

Although we saw safe havens ease, gold managed to claw back losses and more with a move above 1750. This was on more statements by the Fed chairman Jerome Powell saying they are willing to use all tools necessary to stabilise the financial markets. An extra $40+ billion was also allocated to quantitative easing methods within the latest financial stability report. Trump also propped up the dollar saying it is a great thing that they have a strong dollar right now. This is rather contradicting to his prior statements, bashing Jerome Powell for not implementing rate cuts earlier last year. Another factor supporting the safe havens is the ongoing tensions between the US and Iran.

1 HOUR TIMEFRAME

On the 1 hour timeframe, we have seen 3 drives into the high forming a head and shoulder pattern. Price has also broken structure creating a lower low and we have a retracement forming.

Looking at the fundamentals, we had negative CPI data from the UK this morning allowing price to move roughly 70 pips. The recent upside move seen on the hourly appears to be from positive UK House Prices data. Gov Bailey speaks later this afternoon. Tomorrow we have services and manufacturing PMIs ( services is the largest sector in the UK ) and Friday we have more volatility with retail sales data expected to come in highly negative.

As always traders, trade safe and have a great week further. For updates directly to your email, subscribe to our blog.

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