The GBP/JPY began trading in a channel on June 1 of this year where it established a higher low than the previously established yearly low set back in January of this year. On June 01 the pair bottomed out at 117.770 and a week later it established what would become the upper range of the ascending channel to follow, at 124.310. Since then the pair has continued to establish higher lows and lower highs including yesterday's low of 125.655. The pair had found support previously at this level several times in the past few months and now appears to be setting up for a possible bullish run back up to the top of the channel at around 130.190 where the channel intersects with the Weekly R2. If prices do move higher from here, resistance is seen directly above the current prices with the 62 Day EMA at 126.65 and the Weekly Pivot above that at 127.08. Finally the Weekly R1 of 128.30 sits just shy of September's high at 128.800. If prices turn bearish instead, the channel itself is acting as support at 125.63 directly above the Weekly S1 at 125.12. If we get a daily candle closing below 125.00 then the bears may push the pair back towards the Weekly S2 of 123.97 or even make a run for the 6 month low at 120.802. Finally, this is only the second time in 5 months that the pair has closed below the 62 Day EMA, the last being in October when the pair last came close to testing the bottom of the channel...at which time it reversed true to form and reached the top of the channel only 2 weeks later. I am bullish on this pair above 125.20.
Happy Trading!