Forex Video Briefing (8/12) – GBP/JPY, EUR/GBP
Looking at the 4H chart, GBP/JPY has been bearish, but found support at 170.75 at the end of last week. The current rally might find resistance around 172.25, where it would meet the 50-period SMA, and a falling trendline. It would be important to monitor this area and how the market reacts to it after the jobs report. Ability to break higher can suggest a bullish outlook, IF a subsequent pullback does not break below 171.50, preferably holding above 171.75. For now, we should limit the bullish outlook to 173. On the other hand, if the bearish trend remains because price fails to breach the falling trendline and then falls back below 172, there is downside risk toward back towards the 170.75 low, and then the 200-day Simple Moving Average which is around 170.35-170.40 at the moment.
The EUR/GBP is in an interesting technical development. At the beginning August, the pair completed an inverted head and shoulders, and based on that price bottom, we can expect some bullish correction. After last week’s breakout above the neckline, we started this week retreating. Then EUR/GBP fell faster after disappointing ZEW Economic Sentiment data for Germany and the Eurozone. Now EUR/GBP is essentially testing the price bottom.If after the UK jobs data, EUR/GBP holds above 0.7940, it would be respecting a key cluster of support, the moving averages, the rising trendline, a previous support/resistance area. This would suggest a bullish outlook in the short-term with the 0.8033 resistance pivot in sight. A break below 0.7940 however suggests the market could be done with consolidation, and has the 0.7874 low on the year in sight.