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Significant Candle on GBPJPY overnight

Market Analysis

GBPJPY, 4H               

The Japanese All Industry Activity Index fell by more than expected overnight coming in at -0.3% compared to only a -0.2% contraction. Although the miss was small the significance should not be over looked as recently Japanese data has been relatively positive as both the Nikkei and the YEN have strengthened (which is unusual in its self as they are normally negatively correlated). This compares to a significant beat in manufacturing PMI’s that hit a three year high at 53.5. Yesterday’s reporting of the negative Trade Balance for January was also unexpected and more significant with a 0.16 trillion yen deficit compared to expectations of a 0.28 trillion yen surplus. The Asian Lunar holiday always impacts the January figure but this year’s number was not expected to be such a miss.  The USDJPY touched 113.70 earlier this morning and currently trades at 113.50, EURJPY topped 120.30 before receding to 120.05 but holding 120.00 and GBPJPY reached 141.48 before rolling over to 141.10.

The GBPJPY move over the 20 period moving average on the 4hr chart triggered a LONG position at 141.35, with the 14 period ATR at 53 the target is around 141.80- 85 and set at 141.82. The MACD and Parabolic SAR are positive with the RSI at 50 neutral.  Resistance to the move higher is the 50 period moving average at 141.35 (entry) and the 200 period moving average and 61.8 Fibonacci level at 141.57.  A break of the 38.2 Fibonacci level at 140.80 could turn the pair lower.

 

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Stuart Cowell

Senior Market Analyst

HotForex

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