GBP/JPY 1H chart 7:30AM EST 1/31/2013
Consolidation after GDP, FOMC: During the 1/30 session, we had a couple of highly anticipated fundamental event risks in the US advanced GDP for December and the FOMC interest rate decision. The GDP data was terrible, worst since Dec. 2009, and the FOMC decision brought nothing new to the table. In the currency markets, we saw a lot of consolidation following the risk events in USD and JPY crosses.
The 1H GBP/JPY chart shows a consolidation roughly between 143.23 and 144.18. Note a support pivot a bit lower near 143.15 and a resistance pivot a little higher at about 144.23. There is a slight tilt of support levels to the upside throughout the late 1/30 session and the 1/31 Asian-European session. As we begin the 1/31 US session, the GBP/JPY has failed to break resistance 3 times.
Breakout scenarios: There is a bullish bias in the 1H chart. The RSI has mostly held above 40 after tagging above 70. The 200-hour SMA is not bullish since its flat, but the other movings averages and price are above it, showing some bullish bias. Therefore the preferred breakout scenario to trade in is a bullish one. A break above 144.25 with the 1H RSI pushing back above 60 would be a sign of bullish continuation.
Trend: Besides the little bit of bullish bias in the 1H chart, you can see a lot more bullish bias in the daily chart by looking at the RSI and moving averages. You also see a higher resistance pivot at 144.77 that needs to be cleared in the case of a bullish continuation. However, if the market manages to break below 143.10, maybe clearing 143.00, then the focus could turn back on the 139.30 low. Below 139-139.30 area, we have a top, but until then, the focus should be with the trend and the consolidation highs.
Breakout targets: A conventional breakout target is to use the width of the range and project it to the direction of breakout. Taking the 1H range, the target would be roughly 145.15-20 area. Reaching that target would also breaks above the 144.77 resistance and if this breakout sustains, the projection from the daily time-frame is roughly to the 150.40-150.50 area.
GBP/JPY Daily chart 7:35AM EST 1/31/2013
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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