GBP/JPY Technical Analysis: Persistent Resistance
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Talking Points:
GBP/JPY Technical Strategy: Intermediate-term: Mixed, near-term bullish.
GBP/JPY is showing signs of congestion, which can be dangerous for such a pair as that congestion can lead to out-sized and, at times, chaotic moves.
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In our last article, we looked at the prior up-trend in GBP/JPY as price action exhibited signs of congestion by building into a longer-term symmetrical wedge pattern. But given the veracity of the prior up-trend, also combined with the fact that the bearish retracement in GBP/JPY caught support off of the 50% retracement of that prior bullish move, and the prospect for continued bullishness was very much alive.
Since then, we’ve seen a bit more congestion after a down-side break found support on a projected trend-line that had previously functioned as resistance. Buyers returned shortly thereafter, running prices higher by more than 400 pips since that support-check came in a little over a week ago.
Chart prepared by James Stanley
While GBP/JPY still carries potential for bullish-continuation, traders would likely want to await a bit of additional confirmation before looking to chase this theme-higher. For traders looking to add long exposure, awaiting a break of this zone of resistance between ¥142.45-¥142.88 could make the prospect of bullish continuation a bit more attractive. Should this take place, traders can then re-assign this zone of old resistance as support in the effort of top-side, bullish entries.
Chart prepared by James Stanley
--- Written by James Stanley, Analyst for DailyFX.com
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