GBP/JPY plunged in the last hours and now is trading in the red after erasing today’s gains. Price has increased significantly in the morning and it has reached a very strong dynamic resistance. The Yen has increased as the JP225 index has opened with a huge gap up and it has continued to increase. I’ve said in the yesterday’s USD/JPY report that the Yen will dominate the currency market only if the Nikkei stock index will resume the corrective phase. The Japanese Prelim Machine Tool Orders increased only by 5.3%, versus a 13.1% in the former reading period, while the Tertiary Industry Activity rose by 0.1%, matching expectations. On the other hand, the Pound was boosted by the UK’s Average Earnings Index, which it has increased by 2.6%, more versus the 2.4% estimate, the Unemployment Rate remains steady at 4.0%. JP225 has bounced back from the lower median line (lml) of the ascending pitchfork and after the UML retest. You can see that it is almost to reach the downside 50% Fibonacci line where it could find a temporary resistance again. It has jumped above the outside sliding line (SL) of the descending pitchfork and it could increase if it stays within the ascending pitchfork’s body. A further increase will force the Yen to lose more ground versus all its rivals. GBP/JPY has jumped above the median line (ml), but it has failed to stay there. Price has found strong support on the downside 50% line of the minor ascending pitchfork and now has tried once again to make a valid breakout above the median line (ml). It could still increase if it stays above the downside 50% line of the ascending pitchfork, but you should know that a valid breakdown below it and below the LML will open the door for a further drop.

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