GBP/JPY has shown remarkable strength, registering a near 26% rally against June 2020’s major 124.09 lows. This brings it towards a test of a major dropped-down resistance line drawn from 251.11 (a major peak sighted in July 2007), and accordingly the cross should take a breather before resuming higher, Benjamin Wong, Strategist at DBS Bank, reports.
“GBP/JPY’s rally has been augmented by a sustained rise over a key moving average marker at 144.04, and further accelerated by a rather effortless breach over a 147.96 neckline. The upside is clearly off the courtesy of a bullish inverse head-and-shoulders pattern, and that appears to be courting at least a nudge towards the 50% Fibonacci retracement of 195.88 (June 2015’s peak) and the more recent 124.09 lows that calibrates at 159.99.”
“The cross should dissipate some near-term overbought heat as it contours lower from 156.07, with a cut under 154.76 to encourage a further corrective decline. Below that lies the kijun support of 153.45 on the daily Ichimoku charts.”
