Data from the UK has been strong lately, setting the stage up for a forex trading upside break on GBP/JPY’s ascending triangle pattern. This consolidation chart pattern has formed over the past couple of months, as risk has been on and off.
On a longer-term time frame, the triangle looks like a bullish pennant, indicative of further rallies should an upside breakout take place. From a fundamental perspective, the monetary policy bias divergence between the Bank of England and the Bank of Japan reveals that the path of least resistance is upward.
However, the pair might still be waiting for a stronger market catalyst before letting buyers jump in. The forex trading resistance at the top of the triangle has held for quite some time now and it is in line with the 173.00 major psychological level, making it tougher to break.
GBP/JPY Forex Trading Forecast
The freshly released services PMI brought more pound bulls back in the game, as the index came in much stronger than expected and reflected a faster pace of expansion in the industry. Take note that this accounts for a huge chunk of the UK economy’s overall economic activity, which means that a higher GDP figure could be in the cards for the second quarter if the industry is able to sustain its improvements.
An upside break from the 173.00 forex trading resistance could mean a rally that could last by as much as 500 pips, as this is the height of the ascending triangle forex trading chart pattern. This pair tends to get volatile though and the odds of getting a false breakout are high.
The BOE interest rate decision is scheduled this week and this might make a bigger and more lasting impact on GBP/JPY’s forex trading price action.
To contact the reporter of the story: Marco Roemer at email@example.com