The GBPJPY continues to consolidate between 141.00 and 143.00.
We haven’t seen much follow-through from sellers since the risk-sensitive pound cross closed below ascending channel support on January 27th.
At the same time, buyers haven’t managed to alleviate the bearish scenario.
Notice how the GBPJPY is still trading below that 142.80 area I mentioned on January 29th.
As long as the area between 142.80 and 143.00 is intact as resistance on a daily closing basis, the GBPJPY is at risk of further losses.
That said, the bearish scenario hinges on 141.00, in my opinion.
To be more precise, 140.90 is the level I’m watching for now.
Notice how 140.90 was the range top in October and November of last year before flipping to support in December.
That 140.90 area has held as support ever since.
However, I have to maintain a somewhat bearish stance here.
Not just because the GBPJPY is trading below former ascending channel support, but because the pound looks relatively weak.
We saw the GBPUSD break out of an ascending channel last week, and GBPCAD has carved what could be a broadening wedge.
Almost anywhere you look, the pound is losing.
One event that could help the GBPJPY along is Tuesday’s UK GDP figure to be released at 4:30 am EST.
If that doesn’t shake things up, perhaps BOE Governor Carney’s speech at 10:35 am EST will.
As you probably know, I don’t trade the news.
I am, however, always aware of when events like these are occurring so I can try to sidestep any volatility and also take advantage of the resulting price action.
One thing I’ll be watching for with regard to GBPJPY is a daily close below that 140.90 key level.
The pair hasn’t closed below it since November 26th, so such a breakdown would be significant, in my opinion.
It would also open the door to the next key support at 139.30 and perhaps 137.40.
Alternatively, a daily close above the confluence of resistance near 142.80 would turn our attention toward 144.40.
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