Bulls defend 200-EMA at 160.20, consolidation ahead
- The asset has been juggling within a narrow range of 160.28-161.31 since the first trading session in April.
- The RSI (14) in the range of 40.00 to 60.00 signals consolidation but will be followed by an expansion in volatility.
- Pound bulls need to break above the ascending triangle formation to regain control.
The GBP/JPY pair is losing investors’ attention amid a lackluster move. The pair has been hovering in a narrow range of 160.28-161.31 for the past three trading sessions. It should be noted that the pair recorded a new 6-year high at 164.65 the previous week, but failed to hold higher levels.
On an hourly timeframe, GBP/JPY is trading in an ascending triangle pattern with horizontal resistance placed at 161.32 adjacent to the March 29 high and Monday high respectively, while the Uptrend traced from Wednesday’s low at 159.05. The 200-period exponential moving average (EMA) at 160.23 has been a major support for the asset. However, the 50-period EMA overlaps on the asset. The overlap of a short-term EMA and asset prices indicates contraction in volatility.
The Relative Strength Index (RSI) (14) extends hovering in a range of 40.00 to 60.00, signaling consolidation going forward.
A break of the ascending triangle above 161.32 will be followed by a strong upside move, which will send the asset to the March 29 high at 162.62, followed by a 6-year high at 164, 65.
On the other hand, the Yen bulls could gain strength if the asset slips below the symmetrical triangle formation breaching the 200-EMA at 160.23, which will lead the major down to the March lows at 159.06. A break of the March lows will expose the asset to the February highs at 158.06.