GBP/JPY Triangle Formation Warns of Breakout
The GBP/JPY looks poised for a breakout as the pair has been in a triangle formation since mid-May. Consolidation has reached extreme levels which typically precedes a spike in volatility. I will look to position myself for either a bearish or bullish move. Signs that the global economic recovery is sustaining has kept risk appetite firm and if corporate earnings show companies are able to maintain profit levels in spite of the diminishing impact to the bottom line from cost cutting done during the recession, then a case for a long position could be made with a move above 135.00. Conversely, signs that growth is stagnating combined with shrinking profits will reignite concerns that a double dip recession is on the horizon causing a flight to safety and could be pressure on the pair. I will look to go cautiously short below 131.25-7/7/10 low and add to my position with a break of 130.00
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