- GBP/JPY pulls back after retouching multi-year highs.
- The trend is bullish so the pull back is not expected to last before the uptrend resumes.
- Intervention by the Japanese authorities is a risk factor that could push GBP/JPY lower.
GBP/JPY rallies up to 200.65 on Monday just short of multi-year highs (May 29) and then pulls back. Despite correcting back down to the 199.50s the pair remains in an uptrend over a short, intermediate and long-term time horizon, and since “the trend is your friend” more upside it expected.
4-hour Chart
The pair has broken through one – perhaps even two – trendlines underpinning the rally during May. If the correction continues it will probably find support at 198.79 (May 30 swing lows). A break below would suggest further weakness to perhaps the 100 Simple Moving Average (SMA) at 198.40.
Given the dominant uptrend, however, bulls are expected to turn things around once the correction runs out of steam and pushes the pair higher again.
The only sign the pull back may be ending is the formation of a bullish Japanese Hammer candlestick reversal candlestick on the last bar. This occurs when price makes a new low but then recovers to close near the open. If the current period ends as a bullish green candle it will confirm the hammer and could indicate a short-term reversal and resumption of the uptrend.
A break above the 200.75 high will establish a higher high and extend the uptrend. The next targets will probably be at the round numbers – 201.00, 202.00 etc.
Risk of intervention from the Japanese authorities to strengthen the Yen (resulting in a decline of GBP/JPY) could distort the technical picture.
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
AUD/USD consolidates near two-week high, looks to US NFP for fresh impetus
AUD/USD holds steady around the 0.6335 area during the Asian session on Friday as traders now await the US NFP report. Bets that the Fed will cut rates further amid concerns over failing US economic growth keep the USD depressed near a multi-month low and act as a tailwind for spot prices, though tariff jitters warrant caution for bulls.
USD/JPY: Japanese Yen stands firm near a multi-month high against a broadly weaker USD
The Japanese Yen continues to be underpinned by increasing bets for more BoJ rate hikes. Trade tariff jitters and the risk-off mood further seem to underpin demand for the safe-haven JPY. Expectations for further policy easing by the Fed weigh on the USD and the USD/JPY pair.
Gold price remains depressed ahead of US NFP; trade jitters to limit losses
Gold price trades with negative bias for the second straight day, though a combination of factors continues to act as a tailwind ahead of the crucial US NFP report later this Friday. Rising trade tensions continue to weigh on investors' sentiment.
Crypto AI Tokens: Why FET, NEAR and RNDR could outperform BTC after White House Summit
The White House Crypto Summit is scheduled to hold on Friday. Rather than double-down on BTC, sector-wide price trends show that investors are leaning towards Crypto AI altcoins.
Make Europe great again? Germany’s fiscal shift is redefining the European investment playbook
For years, Europe has been synonymous with slow growth, fiscal austerity, and an overreliance on monetary policy to keep its economic engine running. But a major shift is now underway. Germany, long the poster child of fiscal discipline, is cracking open the purse strings, and the ripple effects could be huge.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.