GBP/YEN – STILL VULNERABLE
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).