The GBP/JPY dropped and resumed the yesterday’s bearish candle. Remains to see what will happen because it has reached a very strong dynamic support. The Yen has taken the lead as the Nikkei stock index has dropped significantly since yesterday. The currency pair has shown an exhaustion in the last weeks, but we still need a confirmation that it will start a larger corrective phase.

A further Nikkei’s drop will force the Japanese Yen to appreciate further versus all its rivals, the index could approach and reach a dynamic support.

I’ve added the Nikkei’s Daily chart to show you what the Yen is going up versus its rivals. The index has turned to the downside and closed the gap up signaling a bearish pressure. It could be attracted by the lower median line (LML) of the major black ascending pitchfork where it could find support again.

The perspective remains bullish as long as the index remains above the LML, it could retest the dynamic support before will jump much higher.

The Pound depreciated versus the Yen even if the UK’s data have come in mixed, the Manufacturing Production rose by 0.4% in November, beating the 0.3% estimate and the 0.3% growth in the former reading period, the Construction Output  surged by 0.4%, less versus the 0.7% estimate, while the Industrial Production rose by 0.4%, matching expectations. The Cable has taken a hit from the Goods Trade Balance, which has dropped from -10.8B to -12.2B, it has come in worse than the -10.9B estimate.

Price dropped aggressively and now is pressuring the first warning line (WL1) of the ascending pitchfork, we’ll see what will happen because a valid breakdown will confirm a further drop. You can see that we had a false breakdown in the last weeks, personally, I believe that it will take this out if will close on it. A further increase will be confirmed only after it will close above the 153.65 previous high.