The GBP/JPY, like most of the major JPY pairs, pushed higher yesterday showing the Japanese Yen's weakness against all of the 'majors' and most of the 'minors' as well. This particular pair climbed some 145 pips in only a few hours before falling into a holding pattern between the high of 128.17 and the 4 hour low of 127.13 at time of writing, roughly 1:30 PM in Tokyo. The pair has been trading in an ascending channel since late July or early August and attempted an unsuccessful bearish breakout a couple of weeks ago with a low of 124.71 before climbing 140 pips to engulf the 2 previous day's price action and falling back into the channel. After that move the pair rose to the October high at 128.204 before turning bearish for 3 days and finally bringing us to yesterdays bullish move. Yesterday's engulfing candle overshadowed almost 5 days of price action while the previous move only engulfed 2 days price action and continued some 200 pips higher. Considering the strength of yesterdays push higher, the fact that it began at the bottom of the channel, and that the top of the channel is at least another 180 pips away there is the strong possibility that this pair will continue to climb during London or New York trading. If the top of the channel which coincides with the Weekly R2 is broken at 129.52, look for price to head to 130.80 and possibly even 140.00 in the weeks ahead. However, if price closes below 126.70, we should see the pair fall back to 124.50.
Happy Trading!