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GBP/JPY Forming a Double Bottom at Key Support

The Japanese Yen has been relatively strong in the past couple of months. The GBP/JPY for example retreated from its 2014-high in December at 189.70. In January so far this year, the pair has reached 175.77.

GBP/JPY Daily Chart 1/26
(click to enlarge)

The daily chart shows that around 176, GBP/JPY is finding support from the 200-day SMA, and the 61.8% fibonacci retracement level (176.30). 

After a couple of failed attempts to break below 175.77, there is a possible double bottom forming as we can see in the 4H chart.

GBP/JPY 4H Chart 1/26

(click to enlarge)

Now, if price does not push above 179.00 in the next couple of sessions, the pressure could return to the 175.77 low with risk of breaking lower. 

If price pushes to 180.27, we should first check for resistance immediately after a break, in case of a clear-out. If price retreats from 181, the bearish outlook might come back. Otherwise, above 181.00, we can have a bullish breakout projection. The width of the double bottom is about 250 pips, and 250 pips above 180.27 is near 184.75.

When we look back at the daily chart, we can see that first there is resistance around 182, the previous support area in November and where December price action spiked down. Above that, we have the 184-184.75 area as a possible resistance, involving the 50-day SMA, and a previous resistance pivot, as well as a falling speedline coming down from the 2014-high at 189.70.