Talking Points:
- GBP/JPY moved-up to a fresh 2017 high after our last article, but soon broke-down; giving us a false breakout.
- GBP/JPY is messy near-term; but longer-term charts may open up the possibility for bullish continuation into 2018.
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In our last article, we looked at GBP/JPY showing both double top and double bottom formations on the Daily chart. Given the more consistent pattern showing on the bottom of price action, we looked at a bullish setup around the 150.00 psychological level in the effort of playing a top-side break of the formation. Within short order, bulls had jumped back-in and prices in GBP/JPY rallied up to a fresh 2017 high at 153.41.
GBP/JPY Four-Hour: Fresh 2017 High off of ¥150.00, Then Reversal
Chart prepared by James Stanley
This lack of continuation after that fresh high printed means a couple of different things for traders as we near year-end. First and foremost, we ended up with a false breakout. Bulls were lacking motivation to continue the move whilst at fresh highs, and this is of concern as we may need to see some element of a driver before that situation might change. But, perhaps most disconcerting for GBP/JPY bulls – support hasn’t yet shown, and on shorter-term charts, we have the recent indication of lower-lows and lower-highs. This means that the near-term sell-off may continue towards the double-bottom support at ¥146.95.
GBP/JPY Hourly: Lower-Lows, Highs After False Breakout
Chart prepared by James Stanley
At this stage, GBP/JPY is without a clear near-term trend as we approach year-end, and this can make taking-on exposure with the current technical setup rather challenging.
On a longer-term basis, the big question is whether this year’s gains can hold as we open the door into 2018. Prices in GBP/JPY were eerily quiet in the early portion of the year, building in a rather consistent area of resistance around 146.75-148.29. If we could find another test of support in or around this zone as we move into next year, traders can begin to investigate the potential for bullish continuation into 2018.
GBP/JPY Daily: 2017 Resistance ZoneBecomes Support
Chart prepared by James Stanley
--- Written by James Stanley, Strategist for DailyFX.com
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