GBP/JPY eyes break of its 2015 high

The Bank of Japan held their interest rate at 0.25% as widely expected, and there is little expectation for them to fire up their hawkish engines by any meaningful degree soon. The Bank of England also meets shortly and is also likely to hold their interest rate, at a much higher 4.75%. And recent data makes it unlikely that they will deliver a notably dovish tone for next year’s policy. And that could play nicely with a potential long setup on GBP/JPY.

GBP/JPY daily chart:

A nice bullish rally has emerged from the December low, although it has stalled at the 2015 high once more. It provided resistance back in September ahead of an ascending triangle breakout, but this time only a mild two-day pullback has been seen. The cross found support at the 50-day EMA on Wednesday, and today’s low used it as a springboard to now trade above Monday’s close.

Given the daily RSI (14) is confirming the move higher, a bullish break above the 2015 high is now favoured. While there is a bearish divergence on the daily RSI (2), it is not overbought, and a break higher could also see the RSI break its own divergence.

GBP/JPY 1-hour chart:

The hourly chart shows that the weekly R1 pivot has capped as resistance alongside the 2015 high. And while we saw a sudden selloff from those highs on Wednesday, support has since been found at the 50-day EMA with two bullish hammers.

With the RSI (2) overbought, bulls could wait for dips within today’s range, to say the 195 handle near the 200-day EMA. The bias remains bullish while prices remain above the 50-day EMA / 194 handle.

A break above the 2015 high assumes bullish continuation, with the 197 handle, weekly R2 pivot (197.55) and Nov 20^th high comes into focus, just below 198.

How to trade with City Index

You can easily trade with City Index by using these four easy steps:

Open an account, or log in if you’re already a customer

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
Search for the company you want to trade in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.