Forex Video Briefing (11/19) – GBP/JPY at Range Resistance
The 4H GBP/JPY chart shows the market ranging between 181.07 and 184.66 in November. Today, the BoE released its meeting minutes for the Nov. 5-6 meeting, which resulted in a vote to maintain the interest rate and the size of its asset purchase program. The vote was apparently 7-2, with the two dissents from Ian McCafferty and Martin Weale to raise rates, which came as no surprise because it is the 4th meeting in a row these two “hawks” have voted this way. However, some did expect at least one of them to pull back his vote this time. After all the BoE Inflation report revealed a lower growth and inflation forecast.
Perhaps, the pound got a boost by the minutes being not as dovish as some expected. GBP/JPY is now testing the 184.66 range high.
The 4H chart shows that the breakout is favored because the prevailing trend is intact. Price is above the 200-, 100-, and 50-period SMAs, and the RSI has been able to tag 70 and hold above 40, reflecting persistence of bullish momentum. A break above 184.66 puts the GBP/JPY at new highs on the year. The range is about 360 pips wide. If we project upwards another 360 pips on a breakout, we would be target the 188.25 area. This bullish outlook is viable especially if we see a pullback and respect of 183.00 as support.
A break back below 183 however might shift the short-term mode back to consolidation or even a bearish correction, though the medium-term outlook remains bullish 180. Below 180, the medium-term outlook turns neutral, but still within a multi-year uptrend.