On the
daily chart below, we can see that GBPJPY has broken out of the 172.19 level,
and it may now be pulling back to retest the resistance turned support. We’ve
been seeing the pair rallying for a couple of months as the divergence between
the BoE and BoJ’s monetary policies keeps widening.
In fact,
recent hot inflation data from the UK raised the market odds for more rate
hikes from the BoE as it has the highest inflation rate among the majors. The moving averages have
been acting as dynamic supports, so we may expect the buyers to lean on them
again going forward, all else being equal.
GBPJPY Technical Analysis
GBPJPY Daily
On the 4
hour chart below, we can see that we have a divergence with the
MACD and that
usually indicates a weakening momentum often followed by pullbacks or
reversals. An eventual pullback should come to the strong support zone at
the 172.16 level where there’s confluence of the
upward trendline and the
38.2% Fibonacci retracement level.
The
buyers are likely to pile in on this level with a defined risk just below the
trendline and target a break above the 174.00 high. The sellers, on the other
hand, will want to see this support zone to break to jump onboard and extend
the fall towards the 168.00 support.
GBPJPY 4 hour
On the 1
hour chart below, we can see the short term price action in GBPJPY with the
price bouncing from the 172.50 level. Traders will be watching the
counter-trendline as that’s where the sellers should position for another fall
towards the 172.16 support. The buyers, on the other hand, will look forward to
a break above the counter-trendline to extend the rally towards the 174.00 high
and beyond.
GBPJPY 1 hour