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Talking Points:
- GBP/JPY Technical Strategy: Bullish; near-term price action congesting after another higher-high.
- After an extremely-extended move post-election, traders may want to wait for a deeper retracement before plotting continuation-strategies.
- If you’re looking for trading ideas, check out our Trading Guides.
In our last article, we looked at the continued up-trend in GBP/JPY as the pair had moved-up by 2,000 pips in the wake of the U.S. Presidential Election. At the time, GBP/JPY was ‘digging-in’ higher-low support around an interesting level at 143.23, which was the post-Brexit swing-high in the pair. But after that support cauterized, price action burst-higher, again, to set a new short-term swing-high at 148.46.
But after that resistance showed-up around 148.46, GBP/JPY has been unable to string-together any element of bullish-continuation. While support has shown-up briefly, sellers have come back into the market relatively quickly, and we’re beginning to see lower-lows and lower-highs on shorter-term charts; indicating that we may have some time until this retracement-lower finishes. So while the ‘bigger picture’ bullish trend is still very much alive with price action remaining near highs, traders may want to wait a bit before looking to pose that next higher-low in the pair.
As we move into year-end on a pair that’s seen considerable volatility throughout 2016: Opening the year above 177.00, then dropping as low as 123.00 after the Brexit referendum and then back up towards 148.50 after the Presidential election, traders will likely want to move-forward with a great deal of caution here.
What this means for trend-continuation is a bit more patience in trying to catch that next ‘higher-low’. Below we look at two areas that traders can watch for this to develop.
Chart prepared by James Stanley
--- Written by James Stanley, Analyst for DailyFX.com
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