- GBP/JPY attracted some dip-buying near two-week-old descending channel support.
- The mentioned channel constitutes the formation of a bullish continuation flag pattern.
- The technical set-up favours bullish traders and supports prospects for further gains.
The GBP/JPY cross rallied nearly 70 pips from the early European session lows and refreshed daily tops in the last hour. Bulls are now looking to build on the momentum further beyond the key 155.00 psychological mark.
The strong intraday move up was sponsored by a combination of supporting factors. The underlying bullish sentiment in the financial markets continued undermining demand for the safe-haven Japanese yen. On the other hand, the emergence of some selling around the US dollar extended some support to the British pound.
From a technical perspective, the GBP/JPY cross attracted some dip-buying near a support marked by the lower end of a two-week-old downward sloping channel. Given the recent move up from April monthly swing lows near the 149.00 mark, the mentioned channel constitutes the formation of a bullish continuation flag pattern.
The constructive outlook is reinforced by the fact that technical indicators on the daily chart – though have been losing positive momentum – are still holding comfortably in the bullish territory. This, in turn, supports prospects for the resumption of a strong appreciating move witnessed over the past nine months or so.
That said, it will still be prudent to wait for a sustained break through the trend-channel resistance, currently around the 155.45-50 supply zone, before placing any aggressive bullish bets. The GBP/JPY cross might then surpass the 156.00 mark and aim to challenge February 2018 swing highs resistance near the 156.60 region.
On the flip side, the daily swing lows, around the 154.30 region, coinciding with the trend-channel support, should continue to protect the immediate downside. This is closely followed by the 154.00 round-figure mark, which if broken decisively will negate the positive outlook and prompt some aggressive technical selling.
Some follow-through selling below the 153.70 horizontal support will reaffirm the bearish breakdown and turn the GBP/JPY cross vulnerable. Bearish traders might then drag the cross further towards the 153.00 round-figure mark. The downward trajectory could further get extended towards the 152.25 strong horizontal resistance breakpoint.
GBP/JPY 4-hour chart
-637592746744488538.png)
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.