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What happened to GBPJPY? Is it still bullish?

GBPJPY printed a false trend line break signal on 31 March 2017 but immediately unbroke the next session. It’s trend is still falling. In addition, market sentiment changed in April. GBPJPY driver is now JPY, not GBP.

This is a follow up of this post on 31 March 2017. I have a request from a reader to do an analysis in Chinese. There are two charts attached.

GBPJPY looks just right to try a higher move. I suspect past 3 months was some kind of consolidation-accumulation. In any case, traders will have a tried and tested support to work on.

英镑对日元接下来有望攀高。过去三个月的图形相似建仓,而且找到了支持点。

GBPJPY daily chart captured on 31 March 2017

 

Trend line break turned out to be false signal

Look at first chart showing GBPJPY. What happened to GBPJPY on 31 March 2017 was a trend line break. The next session however which is 03 April, the trend line ‘unbroke’. This is a very common phenomenon that shows trend line breaks as an unreliable signal. I have a comprehensive post on false trend line breaks here.

If you follow the blue boxes in this chart, they show price action on a week-week basis. In this aspect, apart from Week 11, GBPJPY fell every week in a sequence of lower highs, lower lows. There was no bullish expansion in price on 31 March or after. Apart from the false trend line break, there was absolutely no sign of bullish reversal.

GBPJPY daily chart from 12 January 2017 - present

GBPJPY daily chart from 12 January 2017 – present

图一:3月31日英镑对日元 突破趋线是一个假信号。第二天也就是4月3日,GBPJPY马上回撤,接着持续下跌所以趋线仍然是阻力。操作外汇以突破趋线作为信号是不可靠的 -我在这写过一则文章(英语)解释,也提供了许多例子。

如果换个方式分析,将K-线组成每周一组,彩上颜色如图里的蓝色方格,那我们可以看到除了第11周以外,GBPJPY每星期的高低点一路下跌,根本没有翻转的现象。所以那个3月31日破趋线‘牛’的现象完全是骗人的。

 

Something changed in April

Look at this second chart.

GBPUSD and JPYUSD overlay

GBPUSD and JPYUSD overlay, JPY in red

GBPJPY had a fairly stable relationship up to 31 March, which explains the more or less flat base we saw in Q1. In an unfortunate timing, JPY ‘divorced’ itself from GBP by aggressively strengthening from the next session starting from 03 April. This resulted in the fall in GBPJPY.

In my opinion, GBPJPY falling is now a dynamic due to JPY movement, not due to GBP. There could be any number of reasons but this movement is now carried by JPY.

图二:这张图显示GBPJPY至3月尾一路走得紧密,解释了今年第一季GBPJPY横摆的形式。不过不巧的,自4月3日以后市场变化,日元突然强劲,和英镑搞‘离婚’,所以GBPJPY掉了。为什么这样变化,原因可能有许多真正是哪个我说不上,但接下来GBPJPY的走势推动力已经不是GBP,而是JPY了。

Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’.

“Dear reader, I do not have a financial license to give advice. I do not know you the reader. Your financial objective and risk tolerance may be different from mine. I am not responsible for any consequence of your action.

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