GBP/JPY to Test a Short-term Consolidation Pattern Support ahead of BoJ

GBP/JPY

The 1H GBP/JPY chart shows the market trading in a sideways manner. It could be a symmetrical triangle, but the market broke through the declining resistance and hit the 131.80 high, making it a possible ascending triangle as well. Whatever the resistance, the support seems to be clearly in the form of a rising trendline so far since the 4/23 low of 130.17.

When the 4/26 US trading session starts, the market will be near the rising trendline again.The market was bullish before entering this consolidation, so watch out for support from the 130.50 level. However, if the market fails to push back above 131.20, we might be developing bearish bias. The candlesticks in this triangle are dominated by heavy bearish ones, while the bullish once are more numerous but weaker, another sign we might develop bearish bias. A push above 131.20 shelves this bias and reopens the consolidation high at 131.80.

A break below 130.48, with the RSI pushing below 30, will be a sign of bearish breakout. What would the outlook be after a breakout? Looking at the daily chart we see that the triangle low is at 130.17. There is a support area for a consolidation in March in the 130.17-130.50 area.  

Clearing below 130.00 and the 38.2% retracement at 129.97 opens up 129.40, 50% retracement and also a pivot level (129.45).

However, if the market fails to break below 130.00, and say the BoJ does mention need for more stimulus, the market has a chance to test the 131.80 resistance again. A break above that opens up the 133.25-133.42 resistance area from the March consolidation.

Join the Market Intelligence Briefings to get fundamental analysis, technical setups, trade plan assessments for GBP/JPY, and other currency pairs.

Fan Yang CMT is the Chief Technical Strategist, trader, educator and a of the main contributors to FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.