GBP/JPY – Breakout rally losing momentum

Can it break 2021 highs?

Last weeks breakout following a long period of consolidation has seen GBPJPY make strong gains to the upside and it’s about to face its first big test.

The pair has previously seen support and resistance around 154.50 and we appear to be seeing that once more as it pushes for a fifth consecutive day of gains.

The stochastic and MACD on the 4-hour chart suggest that after such a strong run, the rally is losing momentum rapidly, which may indicate that a correction is due.

If we do see further profit-taking and a correction then the first test below could come around 153.75, with a break of this drawing attention back to 152.50, where it saw strong resistance throughout September. This would also fall around the key Fibonacci levels for the recent lows to highs.

A move above 154.50 could see it target the May highs around 156 but again, the momentum indicators will be key, especially if we continue to see divergences, which wouldn’t bode well for its potential to break new highs.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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