GBP/JPY And The Special Fibonacci

Most markets opened on Monday with a huge gap. Some in particular opened at interesting levels. For example, GBP/JPY Fibonacci analysis shows the pair opened at a hard resistance above the daily Ichimoku cloud. What’s an Invest Diva to do now? Let’s figure it out.

1- Fundamental Points

It was mainly the French elections that drove the gap. We covered that yesterday. Japanese yen was one of the currencies which got pretty strong. Probably because market participants turned to it as safe haven.

UK Fundamentals: Brexit got pushed to the front once more after UK Prime Minister Theresa May called for a snap election last week. The GBP jumped high on the news. This could probably be because of the realization that more seats for the Conservative Party means less interference from the opposition parties. That means less uncertainty during the critical Brexit negotiation process. Also when it comes to the final Brexit deal.

Besides this, UK’s economic data was mostly in the red in April. PMI, Manufacturing Production and claimant change all missed expectations. Less important figures such as Producer Price Index and The Average Earning Excluding Bonus were in green territory.

Coming up: UK Gross Domestic Product (GDP) on Friday.

This brings us to the second point of IDDA for GBPJPY Fibonacci analysis: Technical.

2- Technical Points

GBP/JPY Fibonacci analysis shows that the pair started market open at the 23% retracement level at around 141.87. But the interesting part of it, is that this 23% level is created on 2 difference Fibonacci retracements, using 2 different trends.

One is using the massive downtrend than ran through August 2015 all the way to October 2016. Second is retracing the uptrend than ran from October 2016 for 2 months.

GBP/JPY Analysis Daily Chart

GBP/JPY Fibonacci Analysis – Daily Chart

The combo makes this 23% Fibonacci very special. A Special F if you will.The pivot point falls on the 38% Fibonacci level at 138.27.Another important technical observation is the fact that the pair opened above the daily Ichimoku cloud for the first time in 4 months.

But, the fact that it went straight down right after, is giving us mixed signals. But definitely something to watch out for.3- Market SentimentAccording to the SSI, retail trader data shows 59.5% of traders are net-long . However, the number of traders net-long is 15.2% lower than yesterday and 32.1% lower from last week, while the number of traders net-short is 14.7% lower than yesterday and 5.8% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBP/JPY prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current GBP/JPY price trend may soon reverse higher despite the fact traders remain net-long.

GBP/JPY Fibonacci Strategy

As 4th point of the IDDA, you must calculate your risk tolerance before deciding on which trading strategy is suitable for your portfolio.

Disclaimer: Forex is one of the HIGHEST risk investing instruments there is.

With regards to GBP/JPY Fibonacci analysis, here are Invest Diva’s calculations for important approximate levels to keep an eye on:

Support LevelsTurning Point Resistance Levels 129.54135.96141.87133,39138.27146.75

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