By: Mike Kulej
Recently the Japanese Yen has had few days of gains. Likewise, the British Pound had a decent rally. Combination of these two currencies getting stronger created very erratic moves in their cross, the GBP-JPY.
The intermediate term chart of Pound-Yen shows price swings, which are getting smaller and smaller. Early in June, this pair was oscillating between 136.50 and 130.40 in fast moves. Over the last 10 days or so, price has been locked in a much tighter range, of about 300 pips, which became smaller still late last week. This type of price behavior normally precedes a more decisive and directional movement, something that could happen fairly soon.
This chart shows a very irregular price action, with very few discernable trading patterns, but finally something is starting to emerge. By drawing couple of lines between the latest highs and the lows, we can see a triangle formation. Currently the price is testing the upper side of this triangle and is also close to its apex. This means that the GBP-JPY should break outside of this pattern fairly soon. If the move is bullish the 136.50 level is a reasonable objective. Should the direction be down, the low of 130.40, or its neighborhood, might be tested. Either way, there is a high probability that this cross will start to move again within the next few days.
GBP/JPY Price Congestion
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