In Forex, the second half of March is the time the yen is weak. The depreciation of the Japanese currency was seen on almost all fronts, and its scale was astounding. The last few days of March bring us a correction of this movement. The yen is gaining strength, but at this point, it’s hard to consider it as something more than a simple correction.
Technical Movements On The GBP/JPY
As an example, we’ll use the GBP/JPY, which is loved by retail traders thanks to its volatility. The gamechanger here happened on Mar. 22, when the price broke the crucial horizontal resistance on the 158 (green). The movement was very decisive and allowed for creating a firm white candle.
The bullish bonanza lasted until Mar. 28, when the price managed to set the local high slightly below 165. Today the GBP/JPY pair has created a shooting star candle, a formation with a long head and a smaller body on the bottom. That candle has a green light for a bearish correction, which we’re experiencing now.
How Deep Can This Correction Go?
The first target was already reached, and it’s the 38.2% Fibonacci. The ultimate goal should be the horizontal support on the 158 (green) mentioned above. A movement towards this area would be welcomed from the technical point of view as the broken resistances are often tested as supports.
And this price action is still missing. The long-term sentiment remains positive, but we see a chance for a further drop in the short-term.
