GBP/JPY is in a collision course between an uptrend and a downtrend. As both the pound and the yen are losing to the dollar due to each country’s internal problems, the technicals will speak.
GBP/JPY uptrends and downtrends. Click to enlarge:
GBP/JPY was trading in an uptrend during February and it traded around 143.50 at the peak – a peak marking the uptrend resistance. It then eased to 141, touching the uptrend. As GBP/JPY was at this tight spot, it lost the uptrend support line and collapsed quickly to 132 on March 1st. And then a new move began:
From this low point, it began a fresh uptrend in which it trades right now. The support for this uptrend is marked by a low point on March 4th, and another one on March 22nd. The uptrend resistance line is marked by peaks on March 5th, 8th and March 17th.
March 17th’s peak is a meeting point with another line. This is the downtrend resistance line that already began in January 19th and approached again on February 17th. The support for this line appears on February 5th and March 1st.
The scenario of breaking lower on an uptrend, like in February could be repeated now, but also the scenario of breaking the longer standing downtrend to the upside sure is possible.
Fundamentals don’t give any currency an advantage over the other. Japan’s central bank is taking additional measures to stimulate the economy, and the yen suffers. Alistair Darling’s budget in Britain didn’t provide any good news whatsoever, so the Pound suffers as well.
So, GBP/JPY (or Geppy / Dragon) is at technical crossroads, and anything can happen.
Where do you think it will go?
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