Rally has momentum
We’ve been waiting for a breakout in GBPJPY for some time and recently, the closing in of the moving average bands have given the impression that it’s not far away.
While the descending trend line above gives the impression that a break below is a little more likely than above, this is a trend that’s formed over a very long period of time, which arguably make it less reliable as a signal.
So when we’re seeing the pair rallying towards the upper trend line, a breakout looks very possible and, if it comes, it could be the start of a strong trend to the upside.
Not only would the pair break above the descending trend line, it would also break back above the 55/89-day SMA band for the first time in three months.
And the oscillators on the 4-hour chart suggests there’s plenty of momentum in the latest rally to threaten a breakout above the descending triangle. If it happens, the immediate test is roughly 152.50 but as long as we see a daily close above the trend line, there could be further to run.