Good afternoon! There’s a sweet chart pattern forming on GBPJPY signaling that the pair may break out in the near future. Let’s take a look, shall we?
I have the four hour chart up, and we can see a classic chart pattern on GBPJPY: the symmetrical triangle. This characterizes indecision and as the market steps back and looks for a catalyst or confirmation of a new move. Now, this pattern is forming during an uptrend move after finding a bottom around 140.00. Symmetrical triangles tend to resolve and continue the trend, but I am a bit skeptical that this may occur based on what’s going on with the fundies.
The UK is probably the only major economy still stuck in a technical recession, leading the BOE to continue quantitative easing measures to support the economy. For a more in depth analysis of the UK’s situation, check out Forexgump’s recent article in his blog. Basically, he thinks we may see further QE measures as we continue to see weak UK data, like in today’s release of UK data on the Forex calendar. Manufacturing and jobs data read a bit under expectations and inflation is “highly uncertain.” It looks to me that the UK still has a lot to work out before a return to growth is seen, and this may continue to pound the Pound.
What I am going to do for now is watch this pair and wait for a trendline break on a candle close before making a trade decision. Stay tuned!