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GBPJPY Challenging 194.35 Ahead of BoE

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GBPJPY has been on a roller coaster ride since the multi-year high was made in June. Following a gap down on June 29th, the pair plummeted 750 pips in just 7 trading days and eventually found support at the February high of 185.00.

From there buyers were quick to step up, pushing the pair back to the June 29th levels and beyond. On June 17th the pair began forming what would eventually turn into trend line resistance off of the multi-year high at 195.85.

This level was broken on July 29th and subsequently retested as new support between July 31st and August 4th. The pair now sits at the 194.35 handle, a level that has acted as resistance on three separate occasions since mid July.

As expected, the price action of late has been that of a market preparing for what is likely to be a major catalyst within the next 24 hours. The Bank of England is set to announce its lending rate this Thursday at 7am EST.

Regardless of the decision, the inflation report that will accompany the announcement is likely to cause a major stir for the pound. This makes tomorrow’s event a trigger for increased volatility regardless of the outcome.

Timing is always an important factor in trading, but in front of a major catalyst such as this it can easily mean the difference between a winning trade and a losing one. For this reason I have no intention of trading GBPJPY until the dust from tomorrow’s event risk settles.

Summary: Wait for a daily close above 194.35 and then watch for a buying opportunity on a retest of the level as new support. Key resistance comes in at 195.85 and 197.40.

GBPJPY potential breakout on the daily time frame

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