Is this a head and shoulders formation that I see on the 4 hour Guppy chart?
Looks like the pair is preparing to break below the neckline support very soon!
Below are the levels that you must follow.
Forex trading on the British pound / Japanese yen for 4 hours Planned by TV
The price is already testing support around the 180.00-180.50 area, and a break below this could lead to a drop as high as the chart pattern.
That would be nearly 400 points yo!
However, the technical indicators do not look very convincing yet. Stochastic appears to be climbing higher without even reaching the oversold area, which indicates that buyers are eager to return.
Also, the 100 SMA is still above the 200 SMA, which means that the path of least resistance is to the upside.
In other words, there is a possibility that the support will hold and send the GBP/JPY back to the next area of interest at 182.00. Note that the 200 SMA is a dynamic inflection point along the neckline adding to its strength as a floor.
Then again, the gap between the moving averages narrows to reflect a slow bullish momentum and a potential bearish crossover.
Earlier this week, the UK posted weaker-than-expected CPI figures, which could temper the Bank of England’s tightening bets in the near term.
Better keep your eyes peeled for the UK Retail Sales report due before the end of this week if you trade this one!