As a result of rejection of local resistance at 195.00 GBPJPY since August 2015 moved dynamically south. These declines did not reach vicinity of the previous lows and already in November last year there was a demand response. Since then, we have seen steady growth.
Looking on weekly chart we will note that lasting since October last year upswing reached vicinity of support 147.50 which was broken due to results of last year’s referendum, where the Britons decided to leave EU. There a supply response occurred.
It is worth noting that this level has been in the past a major resistance and after breaking held as a strong support. This caused also that in December last year there was a supply reaction in his area. Over the next few weeks we have seen advantage of supply. These declines were not so dynamic, but as a result of announcement by the British Prime Minister, Therese May early parliamentary elections, we again saw a strong appreciation of sterling pound. These increases led GBPJPY back to level 147.50, where once again was a bearish reaction. Further falls were also short-lived and market is already in the vicinity of the mentioned resistance for the third time.
It is also worth noting that the whole, lasting since October ’16 growth has formed a formation of a ascending triangle. Therefore, if the upper limit of the triangle once again is rejected, then we may expect pair to drop to lower limit of the triangle.
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In order for this scenario to be realized we would have to breakout thru bottom from consolidation lasting from end of June this year.
Looking on H1 chart it seems quite probable. Within the larger consolidation market created a smaller one. We are currently in the vicinity of its upper limit, where the first supply response has already appeared. A re-test of the lower box limit could be a signal for bearish breakout