JPY 1Q Forecasts: Range USD/JPY 7-Year Wedge, Bullish GBP/JPY Post-Brexit Break
Whether for the intention of mere analysis or on the hunt for opportunities, there is a tendency among traders looking beyond their normal time frames to seek out setups that pose a dramatic departure from the norms they are experiencing. Most often, this manifests as a hunt for candidates of extraordinary volatility that can feed a breakout and evolve into a systemic trend. Naturally, entering an abrupt and prolific move right at the beginning of its charge would be appealing. Yet in practice, that is an improbable scenario. With a keen appreciation that I don’t know the future, I like to look for opportunities that can perform in prevailing conditions. Further, setups that can perform in as many alternative scenarios as possible while also offering robust technicals and a profound fundamental backdrop are well rounded. Looking into 2021, I’m interested in the gravity of USD/JPY[1]’s range and the contrast for multiple scenarios to a GBP/JPY[2] climb.
Chart of USD/JPY (Weekly)
Chart prepared by John Kicklighter, created with IG
Eventually, USD[3]/JPY[4] will clear the incredible range it has carved out stretching back to 2014. Yet, as mature as this pattern may be on the technical side, the fundamental aspects to this cross look particularly adept at tripping up attempts to force a clear drive. Historically, there is a speculative relationship between these two currencies but with global yields crushed and unlikely to recovery for a few years, there is at present little haven or carry advantage between them. That is likely to reinforce the weight behind the 110 to 102 range. I will look for swings in these bounds.
Chart of GBP/JPY (Weekly)
Chart prepared
