The fundamental strategy for trading GBPJPY

There is quite an interesting pattern emerging on the GBPJPY chart now. It will bring significant profits to well-informed traders, particularly against the background of financial market turbulence and uncertainty.

Basic arguments

Currently, the situation in this month is quite favorable for JPY and somehow negative for GBP. However, fundamentally, the demand for Japanese machinery reduced less than it was expected, which makes JPY stronger and improves the falling trend of GBPJPY.

Technical arguments

Technically, the situation is quite clear - we see a downward movement. The trend remains unchanged, and there are no fundamental grounds for turnover. However, such a long term downwards movement may imply a correction soon. Indeed, such an outcome is possible because speculative wars of big traders always take place during such positive events. Anyways, it will not change the trend.

Analysis of big traders' positions

Picture 1. A price chart of GBPJPY and the indicator of big traders for the period of 13.07.2019 - 13.08.2019.

As we can see in picture 1, the trend remains unchanged, and moreover, corrections have not been particularly successful. Sometimes, big traders increased the number of opened positions, but a correction was not part of their plans. It was rather was a necessity. As for the rest, the number of positions affects the minimums.

Forecast

Based on the facts above, we can assume that the asset will have further DOWNWARD movement. It is indicated by the current speculative and technical situations as well as the analysis of positions of big traders.

To keep your positions under better control, we recommend you to use the following indicators:

• RSI
• Bollinger Lines

RSI helps to understand when the market is "overbought" or "oversold", and Bollinger Lines help to realize when the market is ready for a correction.

To keep the level of risk moderate, we recommend to have an average ratio of 3 trades down and 2 trades up.