GBPJPY ready for larger correction down?
Uppdaterad
Looking at the recent COT report it becomes clear that over the past weeks Yen net shorts have been cut by more than half and are now at a high level that have acted as roof the past 12 months. Yen longs have been added at a higher rate while GBPJPY did it's climb towards the 168.5x level. This time the reduced Yen shorts have been done at critical level. GBPJPY is very Fib friendly and halted at the 2015-2020 61.8 fib level. Comparing the USD GBP and JPY index, it is clear that JPY is the driver in GBPJPY lately. Looking at the fundamentals JPY "should" continue to be weak until signs tells us otherwise, but markets need to take profits all the time and reload at better prices. At the two prior adjustments to the short bias in Yen, price in GBPJPY fell during those periods and then turn making investors add back to net yen shorts. This time price has spiked up while net shorts reduced heavy i.e. yen longs entered the market more aggressively and yen shorts exited the market. Even though the price first fell after first 168.5x run and then did a new run at the 168.7x level net shorts continued to decrease without increasing the net short exposure and became even more aggressive at the 168.7x top.
The COT report indicates to me that we have seen investors reduce their negative exposure in the Yen quite aggressively at a key area. The wider swings is also a sign of reversal in the making. The lower high this week was another sign of exhaustion BUT fridays daily candle did put me off so I am still a bit careful. Looking at the 4 hour chart the 164.40-50 level is most likely the confirmation that is needed to go full bearish in GBPJPY.
So, yes I read a bigger move could be in the works or are already in motion. But to where? Thats above my paygrade and interest. Reading the COT will give us clues about what investors want. So i will wait for clues on when they are done buying back the Yen. On the last two similar moves in net positions price reversed up. This time the decreasing net positions are at the highs so a shift is most likely in the making and we could drop sub 150.00 but I would expect a minimum test of 155.7X. The latest shift in Yen from positive to negative net positions was march 2021 at 151.XX level. Investors are still net negative and this by it self also tells us that there are more investors short in the yen than there is investors that is long. But the added yen longs and decreased yen shorts at the GBPJPY top indicates that we will see more adjustments to positive in the yen and GBPJPY will drop further coming weeks unless GBP suddenly gets some strength and starts rising harder than the YEN. But for now the GBP net negative positions does not move at the same rate as the YEN even though they also decrease their net negative positions.
For the near future Yen will drive GBPJPY and a sharper correction in net YEN positions here at the highs indicate lower GBPJPY prices. Short GBPJPY 164.40 sl 168.80 tp 155.80
Boxes in chart are similar changes in Net positions according to COT.
The COT report indicates to me that we have seen investors reduce their negative exposure in the Yen quite aggressively at a key area. The wider swings is also a sign of reversal in the making. The lower high this week was another sign of exhaustion BUT fridays daily candle did put me off so I am still a bit careful. Looking at the 4 hour chart the 164.40-50 level is most likely the confirmation that is needed to go full bearish in GBPJPY.
So, yes I read a bigger move could be in the works or are already in motion. But to where? Thats above my paygrade and interest. Reading the COT will give us clues about what investors want. So i will wait for clues on when they are done buying back the Yen. On the last two similar moves in net positions price reversed up. This time the decreasing net positions are at the highs so a shift is most likely in the making and we could drop sub 150.00 but I would expect a minimum test of 155.7X. The latest shift in Yen from positive to negative net positions was march 2021 at 151.XX level. Investors are still net negative and this by it self also tells us that there are more investors short in the yen than there is investors that is long. But the added yen longs and decreased yen shorts at the GBPJPY top indicates that we will see more adjustments to positive in the yen and GBPJPY will drop further coming weeks unless GBP suddenly gets some strength and starts rising harder than the YEN. But for now the GBP net negative positions does not move at the same rate as the YEN even though they also decrease their net negative positions.
For the near future Yen will drive GBPJPY and a sharper correction in net YEN positions here at the highs indicate lower GBPJPY prices. Short GBPJPY 164.40 sl 168.80 tp 155.80
Boxes in chart are similar changes in Net positions according to COT.
Kommentera
Last 5 trading days have shown us what I was suspecting that we have seen more shift in investors bias in GBPJPY. In the next COT we will see a massive decrease in net short positions and break the 12 month long roof. That would make non comercials ready to let this drop. At the moment we are making new weekly lows and most likely end with a bearish weekly candle. We are also a month close and this could also impact on a more short timeframe and price bounce friday, so one still need to be careful. But reading COT still indicates 168.xx level was to hard to break, friday we will see the results of the past 5 days trading.
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