After popping up by a whopping 900 pips in the last month or so, GBP/JPY is now confined in a tight triangle just below the 140.00 major psychological handle.
Now check this. The consolidation triangle is narrow enough that it can be considered a “pennant” on the daily time frame.
For newbs out there, pennants USUALLY lead to trend continuation. I say “usually” because, at the end of the day, triangles still denote indecision that could lead to a breakout in either direction.
If the pennant does break above the 141.50 October 17 highs, then we could be looking at a retest of the 146.50 or even the 148.00 previous resistance levels.
If Guppy drops below the triangle, though, then the 136.00 major psychological handle is a good place to target.
What do you think? Which way will GBP/JPY go?
Here’s one for the trend playas out there!
AUD/JPY bounced from the 75.50 channel resistance and is heading fast for the 72.50 area of interest.
Since ALL of MarketMilk‘s trend indicators are on the bears’ side, you can take advantage of current momentum and short the Aussie until AUD/JPY hits a support level.
If you’re not too impressed with the current reward-to-risk ratio, however, then you could also make a countertrend trade as soon as you see a bullish momentum and then aim for a return to October’s highs.
Countertrend trading isn’t for everyone, though, so make sure you’ve got your discipline and risk management strategies ready if you choose to go that route!