GBP/JPY- Entering the key support zone
I also think GBP/JPY looks quite interesting from the short side, although the pair is highly correlated to US equity markets and the S&P 500 seems to be holding the October uptrend. Interestingly, GBP/JPY has not fared so well and has broken below its own uptrend drawn from the October lows at ¥177.75 (as shown on the daily chart). Better buying has been seen in the pair, however if we look at the daily candle, but my key target zone (as measured by the blue coloured area) is widely in play no. How the pair reacts around here could be key, as a break would be outright bearish and signal a deeper correction, perhaps even to the ¥170 area.
Looking at small positions in USD/JPY
The JPY in general is finding good short-covering of late, but one talking point today has been whether the lows have been seen in USD/JPY. If we look at the daily chart the series of lows in mid-February around ¥118.24 have held and as you can see from yesterday’s candle good buying have come into the pair. This has coincided with a nice move higher in US bond yields, which ultimately is helping the USD valuation.
There is no glaring buy signal from trend or momentum indicators, but I am enthused by the price action and the bullish candle. With this in mind traders could look to buy a small position in USD/JPY at market (¥119.24 at the time of writing), with a view to exit the trade if we see a move through support at ¥118.24.
The 23 December and 23 March high (as shown on the chart) intersects at ¥120.16 and I feel adding to the trade on a closing break above here makes a lot of sense. Subsequently a closing break above the December high of ¥121.85 would be outright bullish and again I feel adding to longs on this development would be wise.
Again, keep position sizing low until trend and momentum conditions are working and then adding to the trade is something I feel could help increased profitability in trading.