Key Support Keeps GBP/JPY Bullish in the Long-term

Key Support Keeps GBP/JPY Bullish in the Long-term

GBP/JPY has been sliding sharply since making its 2014-high at 189.71 in early December. After a couple of bearish swings the pair found support around 176.00. Let’s take a look at the charts to assess the medium and long-term outlook.

GBP/JPY Daily Chart 1/21
gbpjpy 1/21
(click to enlarge)

In the medium-term, GBP/JPY has turned from bullish to bearish, or at best sideways pending clues from further price action. However, the long-term trend that started in 2012 has not shifted, it is still bullish.

1) Price bounced off the 200-day simple moving average (SMA)
2) Price rebounded after a Fibonacci retracement of 61.8%.
3) The structure can be considered an ABC correction, or a variation of a Gartley pattern.

These three factors are bringing in buyers around 176, which is keeping GBP/JPY bullish in the long-term.

Bullish Scenario: To the upside, the potential is a bullish continuation, which means at least a return towards the falling trendline seen in the daily chart, which means around or just above 184.00. A more aggressive outlook would be a return to the 2014-highs around 189.70. A more conservative outlook would be the 182.00 handle, which is also around a previous support pivot in December.

Bearish Scenario: Now, if price holds below 182.00, the market will see GBP/JPY in a strong bearish structure, and will have more confidence continuing to short the pair. In this scenario, the downside risk can extend below 176 towards the 172-173 area (using a wave I = Wave V projection), or even down to the 170 psychological level, which was also a common support area in 2014.

GBP/JPY Weekly Chart 1/21
gbpjpy weekly chart 1/21
(click to enlarge)

Another Key Support: Now, when we look at the weekly chart, we see that even below 176, there is room to fall within the context of a bullish secular market.

Around 174.80-175, we see the 50-week SMA, a rising trendline, and a previous resistance area (in 2014). Perhaps, we should keep a limit to the bearish outlook in favor or continuing the prevailing uptrend until a break of the 3 above-mentioned support factors in the weekly chart.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at