GBP/JPY – More consolidation to come?

Momentum moving in favour of sellers

We’ve been seeing consolidation in GBPJPY for several months now and it would appear that momentum is gradually turning in favour of sellers.

While the pair is seeing solid support around 148.50, the rallies are hitting a ceiling earlier and earlier which is typically a bearish signal.

With that support zone also now being intercepted by the 200/233-day SMA band, any breakout to the downside could be very significant.

While the ranges are tightening, there is potentially still plenty of consolidation to come before a breakout happens, with 153 looking like key resistance above.

It is worth keeping an eye on the Fibonacci levels during any rallies as a rotation off one of these may precede a run at the 148.50 support.

A move above the 61.8% retracement level would suggest the consolidation will go on and perhaps we’ll see a move back towards the highs of the range.

The 50 fib has already provided some resistance, coinciding with prior support.

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Craig Erlam

Craig Erlam

Former 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.