Ilya Analysis on GU & UJ

GU - Bearish.. UJ - ?? Bullish

GBP/USD

Will Pound slow down enough to offer entry?

The speed of the Pound’s selloff has persistently failed to offer entry opportunities, skewing risk-reward with each successive leap downward. Last week, we identified GBPUSD trading just above support at a trend line in place since January 2002. Price would go on to break below this juncture, closing the week at 1.8625.

Looking ahead, we see the daily chart showing a very similar Inverted Hammer to that indentified for EURUSD (not shown). We will look for a reversal higher to find resistance near 1.89 and enter short targeting a breach beyond the 1.82 level.

GBP/USD Strategy

Flat.

USD/JPY

Bearish correction gaining traction

Last week, we identified a Hanging Man candlestick on the USDJPY daily chart, suggesting the possibility that the rally was ready for a corrective decline. A pause in bullish momentum indeed materialized, but the pair failed to succumb to selling pressure. Indeed, current positioning finds prices largely in the same place they were last time around.

Looking ahead, we see price action take on a Rising Wedge formation since mid-March. Current positioning sees USDJPY just below resistance and showing a Harami reversal pattern. A reversal may be brewing following last week’s consolidation, though it must be kept in mind that the Harami pattern is considered a weak signal and requires confirmation. In any case, our bias remains bullish as the US dollar index has broken above a downward trend line in place since 2005. We will for a pullback as a buying opportunity,

USD/JPY Strategy

Flat.