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Fan Yang

GBP/JPY - The Bullish Breakout We have Been Waiting For

A couple of weeks ago, we looked at the GBP/JPY and noted that price action was "setting up for a bullish breakout". This week's price action looks like that bullish breakout we have been waiting for.

GBP/JPY Daily Chart

(click to enlarge)

The breakout:
- Price found support just below 136 and has been rallying sharply in the past few sessions.
- The strength of the bullish candles alone suggest a potential bullish reversal.
- After all, price action also broke above a falling trendline that has been holding price action to a tight bearish consolidation mode.
140 is Key:
- However, as we noted in the previous update, we should see GBP/JPY clear 140 first before calling it a bullish reversal. 
- Actually, if we look price action since November 2016, a break above 140 could signal bullish continuation.
- Let's see if price can close above 140 after the 4/21 Friday session.
- Also, we want to see the RSI push above 60. This would reflect loss of the prevailing bearish momentum, which began at the end of 2016. 
- As noted in the previous update, a break above 140 opens up the 148 high as well as the 150 handle. 
- The weekly chart shows that the next key resistance is probably around 151.50. 
- However, an ABC projection (where length of C = length of A) targets the 160 handle.
- 160 should probably be the most aggressive bullish target for 2017, or perhaps into 2018. 

GBP/JPY Weekly Chart

(click to enlarge)