Baxia Markets
December 26, 2023

Navigating GBPJPY: Unraveling Economic Shifts and Technical Trends

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In the ever-evolving landscape of the forex market, GBPJPY takes center stage, driven by recent developments in the UK and the intricate dance of technical indicators. A crucial factor impacting the pair is the UK Consumer Price Index (CPI) hitting 2-year lows, setting a tone of economic uncertainty. The anticipation of a rate cut at the May MPC meeting adds another layer, with the Bank of England's forecast signaling the potential for a rate cut in May 2024.



Zooming in on the 4-hour chart timeframe, GBPJPY's trend paints a bearish picture. The Exponential Moving Average (EMA) 50 positioned below EMA 200 signifies a prevailing bearish trend. The expansion of both lines underlines the momentum's strength, suggesting a sustained bearish sentiment.


A bearish engulfing candlestick appeared when price touched EMA 200 this indicate that the EMA 200 is a strong dynamic resistance. Another bearish engulfing candlestick appeared when price touched EMA 50 proofing that EMA 50 provides a solid resistance. A break above these 2 EMAs may provide early indication of a bullish reversal, a confirmation of the bullish reversal would be when there's a golden cross of EMA 50 & 200.


Key technical levels become crucial navigational markers. The resistance at 187.57 emerges as a pivotal point, a breach of which might signal a robust bullish reversal. Breaking a descending red-colored trendline to the upside may provide early signals especially with a substantial bullish Marubozu candlestick breaking this trendline may offer a more potent reversal indication.


Delving into the Volume Profile indicator reveals a neutral trend, with prices oscillating within the value area denoted by pink horizontal lines. A breakout to the upside of the value area could signify a shift towards a bullish trend, while a downside break might indicate a bearish turn.


The oscillator indicators add depth to the analysis. The MACD histogram and signal line residing below the 0 line align with a bearish outlook, suggesting potential downward pressure. Similarly, the Relative Strength Index (RSI) breaking the 40% level and steadfastly remaining below 60% paints a consistent picture of bearish dominance.


In summation, GBPJPY is ensconced in a bearish trend, reflecting the broader economic uncertainties and technical signals. As traders navigate these trends, the intricate dance of indicators and economic nuances becomes pivotal for strategic decision-making in the GBPJPY trading landscape.


Key Economic Releases to Watch Today

JPY, Core CPI (YoY) (Nov)
Actual 3.20%  vs Forecast 3.20% vs Previous 3.30%    


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