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Talking Points:
- GBP/JPY moved-up to a fresh 2017 high after our last article, but soon broke-down; giving us a false breakout.
- GBP/JPY is messy near-term; but longer-term charts may open up the possibility for bullish continuation into 2018.
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In our last article, we looked at GBP/JPY showing both double top and double bottom formations on the Daily chart . Given the more consistent pattern showing on the bottom of price action, we looked at a bullish setup around the 150.00 psychological level in the effort of playing a top-side break of the formation. Within short order, bulls had jumped back-in and prices in GBP/JPY rallied up to a fresh 2017 high at 153.41.
GBP/JPY Four-Hour: Fresh 2017 High off of ¥150.00, Then Reversal
Chart prepared by James Stanley
This lack of continuation after that fresh high printed means a couple of different things for traders as we near year-end. First and foremost, we ended up with a false breakout. Bulls were lacking motivation to continue the move whilst at fresh highs, and this is of concern as we may need to see some element of a driver before that situation might change. But, perhaps most disconcerting for GBP/JPY bulls - support hasn't yet shown, and on shorter-term charts, we have the recent indication of lower-lows and lower-highs. This means that the near-term sell-off may continue towards the double-bottom support at ¥146.95.
GBP/JPY Hourly: Lower-Lows, Highs After False Breakout
Chart prepared by James Stanley
At this stage, GBP/JPY is without a clear near-term trend as we approach year-end, and this can make taking-on exposure with the current technical setup rather challenging.
On a longer-term basis, the big question is whether this year's gains can hold as we open the door into 2018. Prices in GBP/JPY were eerily quiet in the early portion of the year, building in a rather consistent area of resistance around 146.75-148.29. If we could find another test of support in or around this zone as we move into next year, traders can begin to investigate the potential for bullish continuation into 2018.
GBP/JPY Daily: 2017 Resistance Zone Becomes Support
Chart prepared by James Stanley
--- Written by James Stanley , Strategist for DailyFX.com
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
