The GBP/JPY has reflected the negative sentiment for the Japanese Yen during the London trading session, with the pair moving sharply higher on fundamental news, to trade at 131.35 at the time of writing. This bullish sentiment was clearly signalled on yesterday’s chart, with the price bar closing above the recent sideways consolidation in the 1250.00 to 129.50 price area, at 130.05, and perhaps more importantly above the isolated pivot high of late October. At the same time, the daily trend dots have also transitioned back to bullish, confirming the three day trend, where sentiment has remained firmly positive since mid September. To add further validity to this analysis, the Heatmap has also transitioned back to bullish, following a short period of bearish sentiment, and with the volumes on both the daily and three day chart, now clearly dominated with buying volume, this is all adding to the bullish outlook.
The technical picture on the chart is also very positive, and with the break and hold above recent price congestion now firmly evident, we can expect to see this price region provide a solid platform of support, and the springboard for a sustained move higher in the medium term. The next level that now awaits is the 133.48 high of early March, and a clearance here would then open the way for a run towards the 140.00 level, last seen in March 2011. Some way to go to reach this level yet, but given the current weakness now increasingly evident in the Japanese Yen, this is a distinct possibility in the medium to longer term. For now however, we can just enjoy the ride higher with the conservative entry signal of Monday, giving us yet more confidence!
By Anna Coulling