GBP/YEN – STILL VUL­NER­A­BLE

Finweek English Edition - - Creating wealth -

Trend: Short term down; long term still up. Strat­egy: Bounces are short­able to line 1 but with cau­tion. • One of the most-watched charts right now is the GBP/ yen. A strong yen is bear­ish for in­ter­na­tional stock mar­kets. The GBP has fallen sharply (yen strength­ened) by break­ing down from a head and shoul­ders (la­belled S-HS). The price has now reached the 200-day mov­ing av­er­age (which typ­i­cally pro­vides sup­port) and is bounc­ing from there. Line 1 is a long-term sup­port at 219,70 on its spot clos­ing price. • The daily rel­a­tive strength in­dex (RSI, on top) is over­sold in the short term, which im­plies a rally to come. The weekly RSI still looks vul­ner­a­ble though. Traders should wait for a bounce to short the GBP/yen again (ie short the GBP/long the yen). Look for a bounce to the 229 level, then sell short if a down­ward re­ver­sal oc­curs there. • The down­side tar­get is line 1 at 219,70. (If the price closes be­low 219,50 for two con­sec­u­tive days, it can then fall to 213,50 (which would be ex­tremely bear­ish for world stock mar­kets).

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