GBP/JPY Approaching the 2014-Highs – Breakout Projections

GBP/JPY Approaching the 2014-Highs - Breakout Projections

GBP/JPY consolidated with a slight bearish bias in May as the pound-yen fell from 173.46 to 169.54 in a choppy manner. In the beginning of June, price rallied and reversed this slight downtrend when GBP/JPY rallied above the moving averages and May’s falling trendline.

GBP/JPY 4H Chart
gbpjpy 4h chart 6/15

Last week, we saw the market come back to 171.00, which tested the broken May trendline as support. Traders bought GBP/JPY off 171 and it surged after BoE gov. Mark Carney said the bank might raise rates earlier than the market was expecting.

GBP/JPY daily chart
gbpjpy 6/15

The bullish confirmation from 171 puts GBP/JPY strongly in bullish mode. It is about to challenge the 173.46 high, and is also poised to test the 2014-high at 174.83.

Breakout projections:
If price pushes above 174.85 we should anticipate a strong bullish extension for a new 2014-high. There are a couple of methods we can project the breakout.
1) 2014-range: The 2014-range has been between 163.87 and 174.83, almost 1100 pips. A break above 174.83 could expose another 1100 pip run toward 185.80.
2) A conservative measure could be 50% or 61.8% projection. which is either 550 or almost 680 pips higher, toward the 180.30 – 181.60 range.

At this point, to start the week, if there is a pullback before the 2014-high is reached, the bearish outlook should first be limited to 172. Below 171 however, the outlook will have turned bearish in the short-term, which retains the consolidation, non-directional mode shown by the GBP/JPY in 2014 so far.

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