What did GBP/JPY’s recent support whispered?
February 23, 2014 in Chart Alert
GBP/JPY surely lost upward momentum during the the last week and that may cast some doubts about the continuation of further gains. However, a deeper look on the recent support indicates that the possibilities of a retest of 174.84 and gains beyond that are quite high.
What the recent support indicated?
Support of the price action channel
From a near-term perspective, the support indicated that the support of the price-action channel which has been in place for past 15 months held tight. This adds to the ongoing bullish sentiments.
Ongoing support near 22-week EMA
Longer-term perspective – price-action of past 10 years
The recovery after the great cash had failed at 163.07 during August 2009. Since then GBP/JPY had stayed below that level for over 4 years. We had mentioned that this previous resistance should now act as support in an old post titled “Is GBP/JPY Up For Reversal?“. That was exactly what happened. The recent fall found strong support well above this level at 163.88. This fact indicates that the old resistance is now acting as support and that also goes in the favor of the bullish sentiments.
The short-term view
One factor which is adding to the cautious approach to expect further gains immediately is the near-term resistance trend line. A break of this is critical for further gains.
Do also keep an eye on the periodic GBP/JPY outlook updates.