Bullish Outlook for GBP/JPY: Symmetrical Triangle Breached

Key Insights:

GBPJPY has broken through the long-term symmetrical triangle, reinforced by the underlying inverted head and shoulders pattern, indicating a robustly bullish outlook for the currency pair.

The target for the reverse triangle is considerably higher, necessitating a sustained acceleration in the price to reach that objective.

The price has also breached the diamond formation, indicating the potential for elevated levels in the short term.

The GBPJPY currency pair is currently exhibiting a bullish outlook, driven by technical factors and price action. This article will delve into the technical underpinnings of this optimistic perspective. As inflationary pressures in the UK persist, market participants are turning to GBPJPY to capitalize on potential opportunities in the GBPJPY market, which may continue to favor the British Pound in the near term.

Breakout from Symmetrical Triangle

The long-term chart depicted below showcases the monthly outlook for GBPJPY, highlighting the emergence of a symmetrical triangle. This pattern was first observed in April 2022, signaling the potential for bullish price action in the currency pair. As anticipated, the triangle has been breached, and the price is currently exhibiting an upward momentum. This breakout from the symmetrical triangle can be attributed to the formation of robust base support, as evidenced by the inverted head and shoulders pattern on the monthly chart. The neckline of this inverted head and shoulders configuration has been tested multiple times, indicating that solid baseline support has been established, paving the way for higher price levels.

Continuation of Bullish Momentum

Building on the aforementioned analysis, the long-term outlook for GBPJPY remains predominantly bullish. However, another noteworthy pattern emerged in 2022 – the formation of a reverse triangle. This broadening formation pattern results from the interactions between buyers and sellers, leading to an expansion in the price range. As market participants grapple with uncertainty about future price direction, their erratic buying and selling behavior creates a wider range of price movements, forming a reverse triangle pattern. Heightened volatility, driven by factors such as macroeconomic events, geopolitical risks, and significant news announcements, is reflected in the widening range between the two trendlines.

This reverse triangle, formed by price fluctuations, has its lower line aligning with the neckline support of the inverted head and shoulders pattern discussed earlier in the monthly chart. The pattern has evolved accordingly, with the price on track to reach the higher resistance level at 176-177.

Another bullish factor in this market is the breakout from the diamond pattern, a bullish continuation pattern suggesting strong upward momentum. With this pattern already broken, the price is exhibiting higher levels. The immediate resistance in the market is at 171, followed by 177. Any market correction should be viewed as a buying opportunity, with support levels situated around 165 regions.

Conclusion

In light of the above analysis, it is evident that the long-term pattern for GBPJPY is decidedly bullish, as the symmetrical triangle has been broken. Concurrently, the medium-term outlook also remains firmly bullish, owing to the emergence of both the reverse triangle and diamond patterns. The reverse triangle highlights significant volatility in the market, suggesting the potential for extensive price ranges. Market corrections should be perceived as buying opportunities for traders. With support established at the 165 level, the targets for the currency pair are set at 171 and 176.