The British pound seems to be snubbing economic releases nowadays so I’m focusing on this technical setup on GBP/JPY. What do you guys think of this trade idea?
On the pair’s 4-hour time frame, I’m seeing higher lows and resistance at the 162.00 major psychological mark, creating an ascending triangle pattern for GBP/JPY. Price just bounced off the support a few days back and seems to be on track towards the top.
I’ve considered hopping in the ongoing climb since price is still around 300 pips away from the triangle resistance, but I figured that a short at the top would be a higher-probability setup. After all, risk aversion is in play and the Brexit theme might keep the pound’s gains limited.
Besides, data from the U.K. economy came in mixed, with the CPI reports showing weaker price pressures and the jobs data reflecting a pickup in hiring and wages. Japan’s GDP report, on the other hand, posted a much stronger than expected growth figure of 0.4% versus the estimated 0.1% uptick. Also, Japan reported an upward revision in its industrial production reading from 3.6% to 3.8% earlier this week.
Because of that, I’m thinking that the path of least resistance for GBP/JPY is still to the downside so I’m gonna have to be more patient in waiting for an actual test of the resistance. Stay tuned to my updates and don’t forget to check out our risk disclosure!