The price of GBPJPY could move lower this week as recently the Bank of England Governor highlighted concerns of recession in the UK.
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The GBPJPY price is one to watch going into this week for a number of reasons. Last week the Bank of England governor Bailey suggested that the central bank will slow the rate at which they hike rates amid fears of a recession in the UK. These comments caused the GBP to drop against all the major currencies including the Japanese Yen. Despite the recent weakness in the JPY the market saw some strength return towards the end of last week as stock markets fell and fear grew in the market. If this sentiment continues we could finally see the strength return to the JPY which could offer reversal opportunities against the weaker currencies.
Looking at the weekly chart we can see that the price formed a bearish reversal candle at the previous week’s highs. The RSI indicator on the weekly chart shows the price in an overbought condition adding confluence to a potential reversal. The 4hr chart also shows the price breaking through key lows. In the video we highlight what happens when the price moves into a new impulsive phase. If the weekly chart is bearish we should see a bearish trend develop on the 4hr time frame which could provide opportunities for a short if the price can test previous resistance zones.
If the price retests the previous stalling point of the previous lows and forms a bearish reversal candle we can look for short opportunities. Alternatively we can look for the lower time frame to change trend and agree with the higher time frame trend.
Have you seen our recent week ahead analysis video? You can watch it here.
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