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.
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.
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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