GBP/JPY Price Analysis: Buyers threatening to invalidate the head-and-shoulders pattern in the H4
- GBP/JPY climbs despite forming a head-and-shoulders chart pattern in the 4-hour chart.
- The UK and Japan were on holiday on Monday, meaning volumes would increase during Tuesday’s session.
- If the GBP/JPY clears the 164.30 mark, that will invalidate the head-and-shoulders chart pattern, paving the path for further gains.
The GBP/JPY snapped four days of consecutive losses and climbed above the 20, 50, and 100-day EMAs on Monday, gaining 0.28%, despite a risk-off impulse in the FX markets. As the Asian session begins, the GBP/JPY is trading at 163.84, above its opening price by 0.08%, at the time of writing.
GBP/JPY Price Analysis: Technical outlook
The GBP/JPY daily chart, remains neutral-to-upward biased, though it should be noted that buyers regained control, clearing resistance levels at the 20, 50, and 100-day EMAs.Furthermore, the Relative Strength Index (RSI) bounced at around the 50-midline, renewing GBP buyers’ hopes for a re-test of the YTD high. A clear break of the 164.30 would pave the way for further gains.
The GBP/JPY 4-hour chart confirms the bearish bias in the near term. A head-and-shoulders chart pattern remains in place, which, measured by the distance of the head-to-the-neckline, would target a drop from current spot prices toward 161.50. Nevertheless, during the last couple of sessions, the GBP/JPY edged towards the neckline at around 164.30, which, once cleared, would negate the pattern, opening the door for higher prices. Otherwise, the GBP/JPY first support would be the daily pivot at 163.50. Break below will expose the S1 pivot at 163.12. A breach of the latter will expose the 200-EMA at 162.93, followed by the S2 daily pivot at 162.69, ahead of the 161.50 targets.
GBP/JPY Key Technical Levels
Author
Christian Borjon Valencia
FXStreet
Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.
