- GBP/JPY trimmed a part of its intraday gains after the BoE announced its monetary policy decision.
- The recent price move constitutes the formation of a bullish inverted head and shoulders pattern.
- A sustained break below weekly swing lows is needed to offset the near-term constructive outlook.
The GBP/JPY cross maintained its bid tone through the mid-European session, albeit retreated few pips from three-day tops after the Bank of England announced its policy decision.
Looking at the technical picture, the recent price action over the past one month or so constitutes the formation of a bullish inverted head and shoulder pattern on the 4-hour chart. The neckline resistance is pegged just ahead of mid-153.00s, which should act as a key pivotal point for short-term traders.
Meanwhile, technical indicators on the mentioned chart have just started moving into the positive territory and add credence to the constructive setup. That said, oscillators on the daily chart are yet to confirm a bullish bias and warrant caution before positioning for any meaningful upside.
Hence, a sustained break through the neckline resistance is needed to confirm the near-term bullish bias. In the meantime, any subsequent positive move is likely to confront some resistance near the 152.85 horizontal zone ahead of the 153.00 round-figure mark and the key 153.40-45 hurdle.
On the flip side, the 152.00 mark now seems to protect the immediate downside. Any subsequent decline might be seen as a buying opportunity near the 151.70-65 region. This, in turn, should help limit the downside near the weekly swing lows, around the 151.15 area touched on Monday.
Some follow-through weakness below the 151.00 mark might negate the bullish head and shoulders pattern and prompt some aggressive technical selling. The GBP/JPY cross might then turn vulnerable and accelerate the downfall further towards challenging the key 150.00 psychological mark.
GBP/JPY 4-hour chart
-637637615323829101.png)
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD pares gains below 1.0950, focus shifts to US ISM PMI
EUR/USD is paring back gains below 1.0950 in European trading on Monday, helped by a pause in the US Dollar decline. Traders look to adjust their USD positions ahead of the US ISM Services PMI data while risk-off flows still dominate on Middle East tensions.
USD/JPY remains heavy amid intense risk aversion, BoJ-Fed divergence
USD/JPY remains under heavy selling pressure in the European session on Monday. Mounting US recession fears and escalating Middle East conflict dent risk appetite, adding extra legs to the safe-haven Japanese Yen, already boosted by the BoJ-Fed policy divergence.
Gold price steadies on firm Fed rate-cut bets, Middle East conflicts
Gold price recovers above $2,440 after declining to near $2,410 in Monday’s European session. The precious metal faced selling pressure as profit booking kicked in while attempting to recapture all-time highs above $2,480.
Bitcoin price falls below $50,000 amid rising Israel-Iran tensions
Bitcoin's (BTC) price shows weakness on Monday, trading 12% lower at $50,898 at the time of writing, amid a slowdown in US employment as shown in the NFP report for July published on Friday and rising Israel-Iran tensions.
Five fundamentals for the week: Global sell-off has a life of its own, Middle East may spiral out of control Premium
Panic – no better word to describe a fall of over 12% in the Nikkei stock index and plunges in almost all assets. Will it continue? The sell-off has a life, but the factors triggering it matter.