Forex Technical Analysis. GBPJPY trading higher on the back of weak yen via ForexLive

October 23, 2014: The GBPJPY is trending higher today on the back of weaker JPY helped by stronger US equities.

The GBPJPY is up strongly today and testing the 100 day MA (blue line in the chart below) at the 173.367.  This is giving the trend move higher today a cause for pause and the sellers are pushing the price modestly lower off of that level, but only modestly.

GBPJPY is racing higher but stalls at the 100 day MA.

The buying in the pair today is largely influenced by the JPY weakness (higher USDJPY). The GBPUSD is not contributing to the gains in this pair. In fact the GBPUSD is lower on the day.  That is ok.  However, it could be a problem if the USDJPY rally starts to lose steam. (it is pausing as well at the 108.20 – see POST HERE) . The GBPUSD is feeling the sting from the BOE meeting minutes and the weaker Retail Sales this week.  Will GDP tomorrow be the hat trick or run counter to the bearishness from the BOE and the Retail sales?. The expectation is for 0.7% QoQ vs 0.9% in 2Q.

You can drive yourself crazy thinking about the pieces of the GBPJPY (i.e. USDJPY and GBPUSD) and also the fundamentals. So lets focus on the pair and the technical picture of it.

We know the day is showing a trend like move higher. The 5 minute chart below is showing that strength. The buying is steady and consistent. The corrections are modest. We know the 100 day MA is getting in the way of further gains at the 173.369. Traders may be lightening up against this level or setting shorts (dangerous in a trend move,but risk can be defines)

Buyers nevertheless, remain in control. Where do they lose some control?

Looking at the 5 minute chart, if the price moves below the 50% of the last leg up at the 173.137 level,  that would be a crack in the bullish armor.  Does it turn the bias terribly bearish? No, but it gives the sellers against the 100 day MA some satisfaction. Failure to do that and those sellers above, feel the pain and the fear from a potential break – and run – above the 100 day MA. They could reverse and buy and add to the bullishness.

So buyers in control, until the sellers can prove they can win the smallest of battles – the one at the 50% of the last leg higher. A move above the 100 day MA will target 173.62 and then 174.346 – the 50 % of the move down from the September high.

GBPJPY 5 minute chart shows the buying momentum. Little in the way of corrections has the buyers in control.

posted via ForexLive