Following a gap up to start the week, the GBPJPY is testing the resilience of sellers above the 142.80 handle. This level has capped every advance since the pair closed below the confluence of support on August 10th.
Buyers are now facing a bit of resistance near 143.50. This area served as a pivot between mid-May and early June of this year.
In situations like this, it’s usually best to wait for the session close at 5 pm EST. If buyers manage a close above 142.80, I suspect any retest of the area to be met with an influx of buying pressure.
If on the other hand sellers reject today’s advance with a daily close below 142.80, we could have a bearish pin bar on our hands. It would suggest that bears remain in control and would also re-expose the 140.50 area.
With that said, Monday’s gap up looks promising for GBPJPY bulls. If they can hold on to these intraday gains, we could see the yen cross move higher over the coming sessions. The next key resistance level comes in at 144.30/50.
This horizontal area intersects with former wedge support that extends from the 2016 low. As long as this ascending level holds as resistance on a daily closing basis, my intermediate bias remains weighted to the downside.
I’m going to stand aside for now and wait for a favorable opportunity to present itself. Due to the recent volatility and uncertainty, I will only entertain signals that occur on the daily time frame.
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