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GBP/JPY Technical Analysis: Next Directional Move Proving Elusive

GBP/JPY Technical Analysis: Next Directional Move Proving Elusive

James Stanley, Senior Strategist

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Talking Points:

  • GBP/JPY Technical Strategy: Intermediate-term: Congested, short-term: Expansionary pattern (megaphone).
  • GBP/JPY finally broke out of the month-old wedge, but sellers were unable to create significant drive sub-139.00.
  • 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 looked at an expansion in price action in GBP/JPY with the aim of finding the next directional move after GBP/JPY had spent much of the prior three months building into a symmetrical wedge pattern. And while we did see a bottom-side break of the wedge before that megaphone pattern had showed-up, the inability of bears to push prices significantly below prior support made short-exposure in the pair a bit less attractive. Since then, we’ve seen price action volley back towards the projected trend-lines that made-up that symmetrical wedge pattern:

Chart prepared by James Stanley

In our last article, we looked at how to work with a megaphone pattern, biasing the top-side of the pair and looking to the level of resistance at 140.62 to signal top-side continuation potential. This level has come in as short-term resistance, so it would still be as usable today in the effort of catching bullish continuation in GBP/JPY.

Chart prepared by James Stanley

Given the various levels of resistance sitting just above current price action in GBP/JPY, traders can use these levels in the effort of timing a top-side approach. Secondary levels of resistance around 141.03 and 141.60 could become usable. Should bulls pose a break of the 140.62 zone, traders can wait for resistance to show up at a secondary level; at which point they can attempt to catch a ‘higher-low’ around 140.62 in the effort of a top-side, continuation-based approach.

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

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

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