Market News & Analysis

Top Story

Overstretched GBP/JPY rally set for a multi-week corrective decline over Brexit limbo

Medium-term technical outlook on GBP/JPY

click to enlarge charts

Key Levels (1 to 3 weeks)

Intermediate resistance: 140.45

Pivot (key resistance): 141.40

Supports: 135.40 & 134.00/133.55

Next resistance: 143.20/70

Directional Bias (1 to 3 weeks)

The recent 11 big figure rally from 130.40 low from 08 Oct to 141.50 high printed on 17 Oct 2019 is now at risk of shaping a multi-week corrective decline to retrace a portion of the up move from 12 Aug 2019 low to 21 Oct 2019 high.

Bearish bias below 141.40 pivotal resistance for a potential decline to target the next medium-term supports at 135.40 follow by 134.00/133.55 next before another potential multi-week upleg sequence materialises to test the upper boundary of the major “Expanding Wedge” range configuration in place since Feb 2018 high.

On the other hand, a clearance above 141.40 sees a further sequence up towards the 143.20/70 (1.382 Fibonacci expansion of the up move from 12 Aug 2019 low & major “Expanding Wedge” resistance).

Key elements

  • The daily RSI oscillator has started to inch down and a test on an extreme overbought level of 81. In addition, the 4-hour RSI oscillator has shaped a bearish divergence signal at its overbought region as price action of the cross pair has continued to shape “higher highs” from 11 Oct to 21 Oct 2019. These observations suggest the recent medium-term upside momentum of price action has started to wane.
  • Elliot Wave/fractal analysis also supports a potential corrective/mean reversion decline at this juncture. From its 12 Aug 2019 low of 126.55, the cross pair has completed a 5- wave up move sequence; labelled as 1/, 2/, 3/,4/ & 5/ in the 4-hour chart with a Fibonacci expansion cluster right at around the 17/21 Oct 2019 swing high area. These observations suggest that the next price action sequence may be a decline to retrace at least a third of the recent up move from 12 Aug 2019 low.
  • The significant medium-term support zone of 134.00/133.55 is defined by the 50% Fibonacci retracement of the recent up move from 12 Aug low to 17 Oct 2019 high, minor congestion area from 23 Sep to 30 Sep 2019 and the ascending trendline from 03 Sep 2019 low.

Charts are from eSignal



This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.