The GBPJPY is fast approaching a critical resistance level. You may recall the ascending channel that extends from the April 2017. I’ve discussed it several times this year including the May 4th commentary a few weeks before the May 23rd breakdown.
You can see where this former channel support served as resistance during the June 7th session. We were able to catch a good portion of that move back to 144.00 support per the 4-hour wedge that had developed.
Since the June 28th bullish pin bar from the 144.00 handle, the GBPJPY has managed to regain what it lost following the late May breakdown.
However, as bullish as things look at the moment, buyers still have their work cut out for them. As I type this, the pair is just 40 pips below former channel support (now resistance) at 149.00/20.
That will be a formidable test even for the bullish momentum we see today. And it isn’t just former channel support at 149.00/20 either. The 149.80 area has been a key pivot for the pair and is also the 50% retrace from the year to date high to the current low.
That said, I am in no hurry to short the GBPJPY. Without a convincing sell signal from the 149.00/20 area over the coming sessions, I see no reason to attempt shorting this rally.
A glance at the yen pairs across the board shows quite a bit of strength. That isn’t something I want to step in front of, at least not at the moment.
For now, this is a watch list item for me and nothing more. I’ll be keeping a close eye on how the pair responds to that 149.00/20 area over the coming sessions.
Bearish price action at resistance could present an opportunity to get short. On the other hand, it’s going to take a daily close (New York 5 pm EST) above the February trend line resistance (near 149.80) to turn me bullish.