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Guppy‘s had a tough time breaking recent resistance, bringing the pair to a developing support area in the past few sessions. Will bulls hop in here to keep the uptrend alive?

GBP/JPY Uptrend Pullback

GBP/JPY Daily Forex Chart
GBP/JPY Daily Forex Chart

We’ve got a potential long opportunity setting up on GBP/JPY, for both short-term and longer-term bulls. The pair has been in a mega uptrend since the pandemic lows back in April 2020, where the pair tested 124.00 before bottoming out, and it doesn’t look like it’s going to reverse anytime soon.

Is GBP stronger than JPY? Check out our newly released Currency Strength Meter!

With the U.K. posting up solid economic numbers (e.g., U.K. Employment growth hits record highUK inflation unexpectedly surges to 2.1% in May, etc.) that likely raise rate hike speculation among traders, and Japan doing numbers that suggest the BOJ will remain supportive for a very long time (e.g., Japanese flash manufacturing PMI down from 53.0 to 51.5, Japanese jobless rate up from 2.8% to 3.0%, etc.), odds are that traders will remain more bullish on Sterling than the yen for the time being.

That makes the recent dip in GBP/JPY one to watch, especially as the pair nearly retests a rising ‘lows’ pattern now forming on the daily chart above. If stochastic signal oversold conditions and we see bullish reversal patterns in the coming weeks, Guppy is a strong candidate for a potential long position for both short and long term setups.

We don’t have very many top tier economic/policy catalysts expected from either the U.K. or Japan in the month of July, so it’s likely developments with the covid pandemic will be the short-term driver. Be wary of those developments, which may be fast changing now with the Delta covid-19 variant spreading quickly around the world.

What do you guys think? Is this dip in Guppy one to buy? Or do you see a catalyst that could break the bullish support patterns? 

Let me know in the comments below, and as always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.