Breakout of extended consolidation requires retest at 158.00

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  • GBP/JPY is likely to retreat towards 158.00 after an extended consolidation break.
  • The rising 20 and 200 period EMAs are added to the upward filters.
  • The RSI (14) has settled in the 60.00-80.00 range, signaling further gains to come.

GBP/JPY gave up its weekly gains after facing resistance above 164.00. Selling pressure at high levels appears to be a corrective pullback after a three-week streak of trading.

On the weekly scale, the asset has an advantage given a breakout of nine months of extended consolidation last week. The cross was auctioned in a flat channel, which signals an extreme contraction in volatility. The asset rose after a breakout of the consolidation, which ranged from 148.46 to 158.22.

The 20 and 200 period Exponential Moving Averages (EMAs) at 155.43 and 147.26 respectively are rising, adding to the upside filters.

Meanwhile, the Relative Strength Index (RSI) (14) has moved into a bullish range from 60.00 to 80.00, indicating another impulsive wave ahead.

If the asset tests the upper end of the flat channel near 158.00, the cross will start moving towards the previous week’s high at 161.50, followed by monthly highs at 164.65.

On the contrary, the Yen bulls could dictate the price if the cross breaks below the previous week’s low at 156.38, which will drag the asset towards the support of the round level at 154.00. Violation of the latter will send the asset towards the 50 EMA at 152.71

GBP/JPY Weekly Chart

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