Forex Depth Analysis: GBP/JPY

Daily Forex Technicals | Written by Finotec Group | Aug 14 08 09:11 GMT |

GBP/JPY looking for short recovery after harmful inflation report. The pounded fell sharply following the release of the Bank of England's inflation report, selling off to its lowest level since November 2006 at 1.8867. Further, UK futures markets immediately priced in a 60% probability for a December BoE rate cut, versus a 10% chance prior to the release. The Bank's inflation report highlighted the growing risks for a possible recession, stating that risks to GDP are on the downside, with the slowdown sharper than seen in May. While it added that inflation risk remains to the upside, it expects CPI to be below the 2% target in two years if interest rates hold steady at 5%. As such, the next rate move by the Bank of England will more likely be a cut rather than a hike in order to jumpstart the lackluster UK economy. The following technical analysis gives us a detailed lookout on what is expected to happen to GBP/JPY The buying point is at 204.13; based on a failure swing formation. Previous resistance and Fibonacci 23.6% is the take profit at 205.20 Previous support is the stop loss at 202.50 The selling point is at 202.10; based on a break of strong support level. Pivot point is the take profit at 199.80 Previous resistance is the stop loss at 204.50 To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the crossing of MACD line to the signal line below the equilibrium level and is pointing upwards. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI; we can determine that the market is in a bullish direction. The ROC is very important to understand the demand of the market and as we see on the graph it is in an uptrend. Momentum oscillator breaks the zero line and the stochastic oscillator crosses %D line upwards. * The following analysis is for information only; Finotec is not responsible for any decisions or misinterpretations based on the given text. Finotec Group Inc. http://www.finotec.com/ Disclaimer: FINOTEC Tradings Market Commentaries are provided for informational purposes only. The information contained within these reports is gathered from reputable news sources and not intended as investment advice. FINOTEC Trading assumes no responsibility or liability from gains or losses incurred by the information herein.