GBP/JPY is Still Bullish in the 1H Chart:
After a sharp rally last week from a low around 173.00, GBP/JPY found resistance at 180.70 and retreated at the end of the week. As we begin a new week, price has found support at 177.37, but was unable to revive the uptrend, holding below 178.33, which keeps price below the 50-hour simple moving average (SMA). Still, most signs are still bullish.
1) The 200-, 100-, and 50-hour SMAs are in bullish alignment.
2) The 1H RSI has held above 40 since it broke above 80, showing maintenance of strong bullish momentum from last week.
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Narrow Consolidation; Breakout Scenarios:
Looking at the 1H chart, we can see that a break below the 177.37 low would break break below the 100-hour SMA as well. The next support could be around the 176.00 area, a rising trendline, or down to the 200-hour SMA, which resides around 175.65 at the moment.
A break above 178.33 however revives the bullish outlook, with upside first toward 180.70 in the short-term. It should be noted that 180.70 is the current 2014-high. When we look at the daily chart, we can see that a rally since September’s 169.34 low has signaled bullish continuation, breaking above a consolidation period that started at the beginning of the year, though even in consolidation, the bullish bias was kept.
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Bullish Continuation Mode:
When we look at the daily chart, we can see that if price breaks below the 176.00 area and the 200-hour SMA, the GBP/JPY has some more room to fall and it would still be within the bullish outlook. For example, we can expect buyers around the 172.50-173 area, where the 50- and 100-day SMAs reside. A break below 171.70 would clear below the 200-day SMA and introduce a bearish outlook.
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