Weekly Analysis 11/02/18

Posted on Posted in Weekly Analysis

GBPJPY

This pair is known to be a fast moving pair but last week saw a lot of Fundamentals cause this to move faster than usual, first of all the Stock market correction especially in USD stocks caused investors panic and they flocked to a safe haven to put their funds in meaning the JPY was heavily used. The weekly candle ranged just over 650 pips. We have a break and close below the short term trend line at around 152 and the bears pushed it right down towards the long term trend line around the 148.80 level, we saw a rebound just before this level before it closed the week at 150.40. So this is still in a Bullish trend on this pair despite last weeks strong move. The BoE gave an indication Thursday of future and consistent rate hikes which cause a strong bullish move up towards 154 before uncertainty overshadowed in the afternoon and Friday with EU chief Barnier stating that it wasn’t definite that a transition phase after Brexit would take place.

Good Buying opportunities would be a retest of the bullish Trend line around the 149 level, my bias on this pair is still bullish with my long term Bias looking at 160 and beyond as a long term target. Next level of resistance sits around 152.

USD Stock market – Dow Jones

Stock markets have been making consistent record highs well over the last year, with the bulls maintaining huge confidence within the equity markets. As we can see the large bullish move over a sustained period of time. We have recently started to see a market correction within the stock markets with the value of it as a whole falling. This has been kicked off by the market expecting Central banks to start hiking rates across the board. Interest rate hikes may be good for a currency’s strength or savers but its not so good for borrowers and businesses. With borrowing costs looking like it will go higher, the knock on effect is that businesses will be less likely to borrow for infrastructure or expansion plans, the has an effect on the outlook of businesses to investors and they will either start to short or remove their buy positions that would have been heavily in profit.

The Dow fell short of 27000 points (the previous week) to fall nearly 10% last week alone from its open Monday to close Friday. It wiped out months of gains after just 10 days off its record highs.

So I would potentially say that this market correct could be coming to an end after Fridays close candle, with the RSI chart sitting around the oversold level on the daily could give us possible bullish evidence, but be careful, this stock spent a lot of time overbought and it keep rising.