Fundamental overview:
GBP/JPY is expected to consolidate with risks skewed lower. It is undermined by the weaker EUR sentiment, diminished investor risk appetite and Japan's export sales. Sterling was hurt after Bank of England, in its latest quarterly inflation report on Wednesday, cut its forecast for annual growth in 2015 to 2.9% from 3.1% in August and its forecast for 2016 to 2.6% from 2.8%. BOE also said "inflation is more likely than not to fall temporarily below 1% at some point over the next six months," signaling it is unlikely to raise interest rates until the second half of next year. But GBP/JPY losses tempered by demand from Japan importers.
Technical comment:
Daily chart is mixed as MACD indicator is bullish, slow stochastic measure stays elevated at overbought levels, five and 15-day moving averages are advancing but bearish dark-cloud-cover candlestick pattern was completed on Wednesday.
Trading recommendations:
The pair is trading below its pivot point. It is likely to trade in a lower range as far as it remains below its pivot point. Short position is recommended with the first target at 181.05. A break of this target will move the pair further downwards to 180.05. The pivot point stands at 182.80. In case the price moves in the opposite direction and bounces back from the support level, then it will move above its pivot point. It is likely to move further to the upside. In that scenario, a long position is recommended with the first target at 183.35 and the second target at 183.95.
Resistance levels:
183.35
183.95
184.75
Support levels:
181.05
180.75
180.06
The material has been provided by InstaForex Company - www.instaforex.com
