GBP/JPY – Bullish and Awaiting Breakout from Consolidation

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GBP/JPY - Bullish and Awaiting Breakout from Consolidation

GBP/JPY has been rallying since the low on the year at 175.50, made in early February. As we enter March, the pair remains bullish but has become more choppy. The 1H chart below shows the latest consolidation range between roughly 183.55 and 185.

GBP/JPY 1H chart 3/2
gbpjpyh1
(click to enlarge)

It should be noted that while the momentum stalled, the overall price action maintained a slight bullish bias from the prevailing uptrend as price held above the 200-hour SMA, and is now also holding above the 100-, and 50-hour SMAs.

184.20 is the central pivot of the current range, and if price can hold above this level, it would have bullish bias, and the pressure will be on the 185 high. This is the case now. However, if price falls back below 184, the 183.50-55 area will be under pressure, with potential of giving way to a bearish correction or reversal.

For now though, the risk is mostly likely to the upside, and a break above 185 can open up the highs around 187.60, before exposing the 2014-high at 189.71. As we can see in the daily chart below, price action has already broken above a falling trendline coming down from that 189.71 high.

GBP/JPY Daily Chart 3/2
gbpjpyday
(click to enlarge)

The daily chart also shows that the bouced off of 175.50 earlier in February maintained a long-term bullish outlook. GBP/JPY essentially respected the 200-day SMA, and the 61.8% fibonacci retracement of the 168-189.71 rally from October to December 2014.|

With the prevailing uptrend reviving, the GBP/JPY is poised to break above the 185 handle. Now if price slides below 184.00, we mentioned that the pressure would be back on the range support of 183.50. Below that, price has the 181-182 lows to test before opening  up the 180 psychological handle, which was also a support/resistance pivot.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.