Guppy‘s had a tough time breaking recent resistance, bringing the pair to a developing support area in the past few sessions. Will bulls hop in here to keep the uptrend alive?
GBP/JPY Uptrend Pullback
We’ve got a potential long opportunity setting up on GBP/JPY, for both short-term and longer-term bulls. The pair has been in a mega uptrend since the pandemic lows back in April 2020, where the pair tested 124.00 before bottoming out, and it doesn’t look like it’s going to reverse anytime soon.
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With the U.K. posting up solid economic numbers (e.g., U.K. Employment growth hits record high, UK inflation unexpectedly surges to 2.1% in May, etc.) that likely raise rate hike speculation among traders, and Japan doing numbers that suggest the BOJ will remain supportive for a very long time (e.g., Japanese flash manufacturing PMI down from 53.0 to 51.5, Japanese jobless rate up from 2.8% to 3.0%, etc.), odds are that traders will remain more bullish on Sterling than the yen for the time being.
That makes the recent dip in GBP/JPY one to watch, especially as the pair nearly retests a rising ‘lows’ pattern now forming on the daily chart above. If stochastic signal oversold conditions and we see bullish reversal patterns in the coming weeks, Guppy is a strong candidate for a potential long position for both short and long term setups.
We don’t have very many top tier economic/policy catalysts expected from either the U.K. or Japan in the month of July, so it’s likely developments with the covid pandemic will be the short-term driver. Be wary of those developments, which may be fast changing now with the Delta covid-19 variant spreading quickly around the world.
What do you guys think? Is this dip in Guppy one to buy? Or do you see a catalyst that could break the bullish support patterns?
Let me know in the comments below, and as always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.
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