GBP/JPY 4H Chart: Channel Down

NZD/CAD 1H Chart: Channel Down

Comment: We hold a bearish outlook on the New Zealand Dollar this week. The currency pair has recently broken through the long-term moving average and formed a descending channel. The near-term rallies are to be capped by the falling resistance line at 0.9426, while the target is the December 15 low at 0.9242. However, the upside risks are not negligible. First, most of the daily technical indicators are giving ‘buy’ signals. Secondly, the Kiwi is oversold in the SWFX market, being that 73% of positions are already short. Above 0.9426 will likely aim for the 200-hour SMA at 0.9468 and the weekly PP at 0.9491. Additional resistance is at 0.9546/33, created by the December 31 high and weekly R1.

GBP/JPY 4H Chart: Channel Down

Comment: There is a plethora of reasons to be short the Pound against the Yen. The main one is the fact that GBP/JPY is currently trading in a well-defined bearish channel. Additionally, there is plenty of room for new sellers, as 62% of open positions are long. At the same time, the pair is now facing a key support level—the 2015 low that is also reinforced by the weekly S2 and a falling trend-line. Accordingly, in the short run we expect the price to rise back to the upper boundary of the channel. The deciding factor will then be which of the key levels is going to be broken first—either 177.20 or 174.90. In the first case the rate is to aim for the Dec 28 high at 180, and in the second case it is to target 2014 Oct low at 168.

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