GBP/JPY Technical Analysis: Bullish and Bursting to 4-Month Highs
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- GBP/JPY Technical Strategy: Near-term trend bullish.
- GBP/JPY has continued the aggressive top-side move.
- An analyst pick was issued after our last article, and price action has moved-through 3 of 4 targets.
- If you’re looking for trading ideas, check out our Trading Guides.
In our last article, we looked at the recently re-fired up-trend in GBP/JPY. As we had looked at, the pair put in a massive reversal on the heels of the U.S. Presidential Election; but this top-side burst has been a bit longer in the making. Only a month earlier we were seeing weakness in both currencies, and the pair had little signs of life, producing a 200-pip channel near long-term support values. But with the potential for a bullish reversal in GBP, as seen in GBP/USD; combined with the potential for Yen-weakness as driven by implications around the Bank of Japan; the pair had the makings of what could lead to big moves in the weeks ahead. When GBP/JPY popped-higher by 800-pips in the 3 days after the Presidential election, a bullish trend began to show, and in our last article we looked at entry methodology to jump-in on the long-side of that trend.
Just a day and a half after that most recent article, the support level that we were watching for re-entry at 135.50 came into play, and an analyst pick was issued on the long setup. The aggression behind the bullish move has already propelled price action through three of our four targets.
Moving forward, traders would likely want to assign a top-side trend bias here, at least in the near-term, as the potential for further convergence of macro and technical forces can continue to drive the pair higher. Near-term resistance levels can be sought out at 140.96 (Fibonacci level), 142.50 (major psychological level), and then 143.23 (post-Brexit swing-high). For traders looking for support for either re-entry or for stop placement, levels at 138.83 (prior swing-high from September) and then 137.50 (major psychological level, previous swing-low) could be operative for such an approach.
Chart prepared by James Stanley
--- Written by James Stanley, Analyst for DailyFX.com
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