Forex Technical Update
The GBP/JPY has been consolidating after rallying since mid-January from 117.26 to 126.82 on Feb 20. Since the high, the market has been trading in a flag pattern as seen in the 1H chart. The moving averages (100,55,21,8) have converged and the RSI has been mainly between 40 and 60. These all reflect consolidation. The bias is bullish, so let's look at the bullish continuation scenario.
A break of the RSI back above 70 will reflect a return to bullish momentum. Price action will suggest bullish continuation if it can break and hold above 126.50. However, only a break above the 126.82 confirms it. In the daily chart, we see room to the next pivot at 127.28. So this is not too far from the current high, and the daily chart is also showing overbought momentum in a sideways market.
Fan Yang CMT a trader, educator and a Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.