The pound has been somewhat volatile in many of its pairs this morning GMT in the aftermath of somewhat negative employment data. While the rate of unemployment for October was very slightly below expectations and and September’s employment change beat expectations, November’s claimant count change at 64,300 was more than double the consensus. This technical analysis of GBPJPY looks at the four-hour chart.
High resistance here is the latest high around ¥140.40. Low support is less clear, but it could occur in the area of the latest low from Friday near ¥137. In the immediate future, though, moving averages are likely to be more important than these visible zones.
Technical indicators on GBPJPY H4
Moving averages are mixed. Price is between the 100 and 200 SMAs while also below the 50 SMA from Bands which has recently death crossed the 100. The current value area might be a zone of consolidation before the next significant directional movement if there’s a breakthrough or collapse in the current British-EU trade talks.
There are no signs of saturation from either Bollinger Bands (50, 0, 2) or the slow stochastic (15, 5, 5), but the latter at about 73 is closer to overbought than neutral. The expansion of Bands is understandable in the circumstances of the extension of the deadline for the talks, so this doesn’t necessarily mean ongoing higher volatility for the rest of December. We can see volume starting to drop off since last week, which again is normal in the context of the Christmas holidays approaching next week.
Price action and Fibonacci
The only clear fundamental movements on this chart have been upward, but there has been a number of liquidity-driven bouts of losses since the end of last month. This week’s gap up as before isn’t necessarily a signal to buy given the rapid changes in sentiment on the pound since last week.
The 61.8% weekly Fibonacci retracement area has been an important zone of support on this chart. Despite the breakthrough on Friday night, there has been no strong push back below this yellow line. The long tail of the latest period might also suggest demand around ¥138.45. In the absence of significant new fundamental drivers, continued strength of this support is favourable into the end of the year.
Technical analysis of GBPJPY: summary
TA of pound-yen overall indicates indecision and lack of direction in the immediate future. Given the importance of negotiations and sentiment for the pound over the last few weeks, it seems reasonable to expect sideways movement within a fairly limited range for GBPJPY ahead of the holidays unless significant new information comes to light for participants.
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