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The GBP strengthening has led to a breakout of a trend pattern on GBPJPY.
If the trend is going to continue we would expect to see a pullback to support.
What support level is key in this market?
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We’re going to look at GBP/JPY as there could be a setup forming in the next few days since the price broke out of a key consolidation pattern.
Daily timeframe
The GBP/JPY is moving higher in the daily timeframe. It means that the GB Pound is stronger than the JP Yen.
Recently, we talked about the potential of the market to break out of the consolidation, and it did.
The GBP/JPY is in an uptrend. It’s making higher highs and higher lows, showing us that the GBP is stronger than the JPY. The market recently broke out of a consolidation after a large rally up, suggesting that the trend is not ending soon.
Now that the breakout has been confirmed, we need to identify an area where the price could find support.
Four-hour timeframe
In the four-hour timeframe, 150.04 is the most traded level within this consolidation pattern.
The market has been there a number of times, showing us that buyers were stepping in around this area. We know that because the price broke higher and made higher highs.
So, I would look for a continuation of this move on a pullback entry, around 154.04.
If the price makes its way back down – maybe a slight four-hour pullback, and as long as the price doesn’t close below these swing lows at 153.50 – we should see the market continue the trend to the upside.
On the four-hour timeframe, we can see a clear pattern that was broken. The most traded level within the consolidation is 154.04. If the trend continues, then we could expect a retest of this level as support.
I’m going to watch 154.04 for a potential long opportunity on GBP/JPY, in line with that GB Pound strength.
The fact that we’ve broken out of this trend pattern is making me think that the trend will remain upside. So, look for the price to pull back into the previous structure for long opportunities.
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