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TREND IN FOCUS: GBPJPY (H4)
– Momentum behind the Sterling has slipped early this week, with scores falling back from positive to relatively neutral against the AUD, JPY, NZD, and USD. On Monday, I cautioned that momentum behind the GBPUSD was starting to wane.
– The GBPJPY rebound produced an 8-/21-SMA cross to the upside, but gains were capped near 149.52, the 38.2% Fibonacci retracement from the February 25 low to the May 22 high.
– The 8-/21-SMA structure is compressing once more on the H4 timeframe, and the Slow Stochastics (5,3,3) issued a sell signal on the 21:00 EDT to 01:00 EDT H4 candle overnight.
– A break below 147.00/10 could gather pace towards the 61.8% Fibonacci retracement at 145.06.
*Trend definitions: “uptrend” is defined as 8-MA21-MA55-MA; “downtrend” is defined as 8-MA21-MA55-MA; a “trendless” market occurs when continuity is absent.
*Scoring methodology: there are seven time frames, ascending from m15 (15-minutes) to W1 (one-week). In ascending order, each pair is assigned a value from -7 to +7 based on the trend apparent on the specified time frame (I.E. a m15 uptrend equals +1, whereas a H1 downtrend equals -3). If neither an uptrend nor downtrend is present, the trendless timeframe receives a score of 0. These points are totaled and the average is reported on the right. The strongest uptrend would achieve a score of +4.00, while the strongest downtrend would achieve a score of -4.00.
— Written by Christopher Vecchio, Currency Analyst
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