By: Mike Kulej
The ever-popular “beast”, the GBP-JPY, has staged a very impressive rally so far this year. It advanced from 125.40 to the recent high of 135.50. Now, however, the price is moving sideways, in a trendless fashion, as if waiting for a market event, which will decide its next move.
This lack of direction is shown by a symmetrical triangle developing on the daily chart. By itself, it does not provide clues about the next move. If anything, it slightly favors prior trend, which is up. The GBP-JPY is above the 100 SMA, as well as the Ichimoku cloud, which is bullish. In addition, the price also broke above the major resistance of the previous high, at 134.20. Put together, this would suggest another bullish in the near future.
One has to remember, though, that a lot always depends on big fundamental developments. There is one coming on Thursday, in form of interest rate decision by the Bank of England. This could easily send Pound crosses, including the GBP-JPY, on a large move either way. With this in mind, it is probably prudent to wait until a breakout from the triangle, which would indicate the next most likely direction.