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GBP/JPY Technical Analysis: Roaring Back to Life

GBP/JPY Technical Analysis: Roaring Back to Life

James Stanley, Senior Strategist

GBP/JPY Technical Analysis: Roaring Back to Life

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Talking Points:

  • GBP/JPY Technical Strategy: Intermediate-term: Bullish. Near-term: bullish.
  • GBP/JPY has now rallied by more than 600 pips off the lows, but perhaps more importantly has broken above the 50% marker of the most recent retracement.
  • If you’re looking for trading ideas, check out our Trading Guides. And if you’re looking for ideas that are more short-term in nature, please check out our Speculative Sentiment Index (SSI) Indicator.

In our last article, we attempted to gauge when or if the up-trend in GBP/JPY might be set to continue. After the pair had rallied by more than 2,300 pips from the lows of October, but after the FOMC rate hike in December, a change-of-pace developed in the pair as buyers ran out of steam and began take profits.

This developed into a drop of over 1,200 pips in the following month, and this led to many questions around the sustainability of the up-trend in GBP/JPY. But after catching support at the vaulted 50% level of that most recent major move (taking the post-Flash Crash low up to the December high), hope was restored that bulls may be able to re-take control of GBP/JPY price action. In our last article, we marked the level at 142.50 as significant, as this is 50% of the retracement move as well as being a psychological level. The fact that we were able to drive over this level indicates that bull may be able to continue driving prices higher, and this opens the door for bullish strategies.

GBP/JPY Technical Analysis: Roaring Back to Life

Chart prepared by James Stanley

Given recent technical structure, there are three significant areas of price action swings for traders to investigate for support variable and stop placement, each outlined on the chart below. For traders looking at aggressive entries, a batch of support around the prior swing of 141.70 could be usable. For those looking to give the entry a little more ‘room to work,’ the zone around 140.75 looks more operable. And for those that want a conservative approach, the back of support around 139.00 could be attractive as this could get risk levels below the significant psychological level of 140.00.

GBP/JPY Technical Analysis: Roaring Back to Life

Chart prepared by James Stanley

--- Written by James Stanley, Analyst for DailyFX.com

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Contact and follow James on Twitter: @JStanleyFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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