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The British pound has managed to find buyers recently against the Japanese yen, as the GBPJPY pair traded higher. However, this has less to do with the British pound strength and more to do with the Japanese yen weakness. There were a few economic releases lined up during the Asian session in the Japan. The data was mostly on the negative side, as the Japan’s unemployment rate rose by 0.1%, and the industrial production data came below expectation. One important thing to keep in mind is that the yen weakness looks overextended and a short tern correction is possible. So, one need to be very careful chasing the yen lower against most major currencies.

There is a monster triangle forming on the hourly chart for the GBPJPY pair. The pair is currently heading towards the triangle resistance area, which is around the 172.45 level. This level also coincides with the 76.4% fib retracement level of the last fall from the 172.68 high to 171.64 low. So, there is a chance that the pair might fail to break the triangle, and move lower again. One the downside, the 200 hourly moving average holds the key in the short term. A break and close below the same followed by a break of the triangle might open the doors for a larger correction moving ahead.

On the other hand, if the British pound buyers manage to break the triangle resistance area, then there is a possibility of the pair creating a new high above the 172.68 level. The RSI is well above the 50 mark, which cannot be seen as a bearish sign.

Overall, staying sideways look like a wise option until some more bearish signs emerges on the hourly timeframe.

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Posted By IKOFX Technical Team: Online Forex Broker
Website: http://ikofx.com