GBP/JPY appears to be pausing from its climb, possibly pulling back to the area of interest visible on the 4-hour chart.
Are buyers ready to jump in soon?
GBP/JPY 4-hour Forex Chart by TradingView
Traders appear to be bracing for this week’s Bank of England (BOE) rate decision, as expectations are running high for another easing announcement.
But can GBP/JPY still sustain its uptrend that’s been running since October?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the British pound and the Japanese yen, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
Risk-taking has been propping the U.K. currency higher in the past few weeks while doubts over the Bank of Japan’s (BOJ) hawkish stance have also emerged.
The pair has just retreated from resistance near the pivot point (207.97) and could pull back to the area of interest spanned by the Fibonacci retracement levels. In particular, the 50% Fib could attract buying interest, as it lines up with the 204.00 major psychological level, a rising trend line, and S4 (203.68).
Note that the 100 SMA is above the 200 SMA to suggest that the path of least resistance is to the upside, and that the gap between the technical indicators is widening to reflect strengthening bullish momentum.
Keep an eye out for reversal candlesticks at nearby support levels, too, as a continuation of the rally could take GBP/JPY up to R1 (209.35) then R2 (210.32) next.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment!
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
