Forex Technical Update
The 1H GBP/JPY chart shows price action rising above a declining channel that anchored out of a rising channel. The recovery in GBP/JPY does not seem to be over as the RSI failed to push below 40, and is now pushing above 60. Also, the market respected a pivot near 118.90. The market also mainly stayed above the 20o-period simple moving average.
Heading into the US session, the market paused, but the Jobless claims data that came out at 8:30 was better than expected (391K, forecast 420K, prev: 428K), and the concurrent 1H candle accelerated. While this report is in no way indicative of a change in the trend of unemployment, it does provide a temporary risk appetite. At least it is not a risk-off trigger.
The GBP/JPY's upside is going to depend on whether it breaks a resistance pivot at 120.60. A look at the 4H chart shows that above 120.60, the next pivot is likely the 122.20 level, near 38.2% retracement. Note that this rally would push above a declining trendline as well. A more aggressive recovery can push toward the 200-period simple moving average near 123.00.
This scenario does a complete 180, if there is failure to push above 120.60, and a fall below 118.90, creating a double top that is contained below a declining trendline. In that scenario, a retest of the low near 116.85 would be in sight in the short-term.
Fan Yang CMT
Chief Technical Strategist