GBPJPY closes below its opening price unable to hold early session gains
British Pound/Japanese Yen (GBPJPY) Technical Analysis Report for Oct 26, 2020 | by Techniquant Editorial Team
Moving lower for the 3rd day in a row, GBPJPY ended Monday at 136.54 edging lower 1 pip (-0.01%). Trading 33 pips higher after the open, the forex pair was unable to hold its gains as the bears took control ending the day below its opening price. Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (GBPJPY as at Oct 26, 2020):
Monday's trading range has been 77 pips (0.56%), that's far below the last trading month's daily average range of 113 pips. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently lower than usual for GBPJPY.
One bearish candlestick pattern matches today's price action, the Bearish Spinning Top. The last time a Bearish Spinning Top showed up on October 12th, GBPJPY lost -0.86% on the following trading day.
After trading down to 136.30 earlier during the day, the market bounced off the key technical support level at 136.47 (S1). The failure to close below the support might increase that levels importance as support going forward. After having been unable to move lower than 136.37 in the prior session, the pair found buyers again around the same price level today at 136.30.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Buying could speed up should prices move above the nearby swing high at 137.67 where further buy stops might get triggered. Selling could accelerate should prices move below the close-by swing low at 135.41 where further sell stops might get activated. As prices are trading close to October's high at 137.88, upside momentum could speed up should GBP/JPY mark new highs for the month. As prices are trading close to October's low at 135.06, downside momentum might accelerate should the currency mark new lows for the month.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bounced off Technical Support S1" stand out. Its common bullish interpretation has been confirmed for GBP/JPY. Out of 467 times, GBPJPY closed higher 55.67% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 52.46% with an average market move of 0.14%.
With four out of the seven Major FX Pairs closing lower today, the ones that stand out on the negative side are EURUSD losing -0.44% and AUDUSD closing -0.22% lower. On the flipside the best performers have been USDCAD closing 0.68% higher and USDCHF gaining 0.38%. Looking at the other Minor FX Pairs and Crosses, the winners of the day have been USDTRY surging 1.54% and EURTRY closing 1.12% higher. The worst performers of the day have been TRYJPY tanking -1.37% and CADHKD closing -0.67% lower. Read more