Getting ready for publication of economic data in Japan
The British Labor Party, along with other opposition movements, said they would not allow the country to leave the European Union without a mutual agreement. Will the GBP/JPY quotations grow?
The upward movement indicates strengthening of the British pound and weakening of the Japanese yen. Earlier, the British Prime Minister, a representative of the Conservative Party, Boris Johnson, said that Britain would leave the EU on October 31, 2019, regardless of whether the agreement was signed or not. The parliamentary opposition of Great Britain is going to force the prime minister to either postpone Brexit or conclude an agreement with the European Union. To do this, it can block the adoption of the necessary laws. French President Emmanuel Macron said that he was ready to help in softening the conditions for Britain to exit the EU. Concluding a Brexit agreement can significantly reduce economic risks for the British economy and help strengthen the pound. In turn, macroeconomic data may have a negative impact on the yen. August 30, 2019 will be published: inflation in Tokyo, unemployment, retail sales, data on the number of start of construction of houses and other indicators. Most forecasts look negative. In addition, the yen is considered by investors as a protective asset in case of increasing global risks. It may fall in price amid US-Chinese trade negotiations.
On the daily timeframe GBP/JPY: D1 adjusted upward from the low since October 2016. Before opening a buy position, a downtrend resistance line should be broken.Various technical analysis indicators have generated signals to increase. Further growth of quotes is possible in case of positive news about Brexit and negative macroeconomic data in Japan.
- The Bolinger® bands greatly expanded, indicating high volatility. The bottom line of the Bollinger has a slope up.
The bullish momentum may develop if GBP/JPY exceeds the last upper fractal and the downtrend resistance line: 131. This level can be used as an entry point. The initial stop lose may be placed below the last lower fractal, Parabolic signal and the minimum since October 2016: 126.5. After opening the pending order, the stop shall be moved following the Bollinger and Parabolic signals to the next fractal minimum. Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place a stop loss moving it in the direction of the trade. If the price meets the stop level (126,5) without reaching the order (131), we recommend to cancel the order: the market sustains internal changes that were not taken into account.
Technical Analysis Summary
Position Buy
Buy stop Above 131
Stop loss Below 126,5