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GBP/JPY - Head and Shoulders vs. Rising Trendline

We saw GBP/JPY fail to break into a bullish continuation mode yesterday. Price fell back after briefly breaking above a falling trendline from last week. As we get ready for the 6/27 US session, the pair has completed a head and shoulders pattern and is now testing a rising trendline support from the 169.54 May-low.


(eurgbp 4h chart, 6/27)

If price breaks below 172.50, it will likely clear the rising channel, and open up the 171 and 169.55 area. The 4H RSI is around 40, and a break below would reflect loss of the bullish that has been developing in June. Then, an additional bearish clue would be a failed pullback one that respects the head and shoulders pattern as resistance.

Taking a look at the 1H GBP/JPY chart, we see a market that is trying to turn bearish as the moving averages shift towards bearish alignment. This week's failed bullish attempt above the falling trendline resistance adds weight to the bearish outlook. At this point, price should hold below 173. Otherwise, if price holds above 172.50 and pushes above 173, which would likely also clear above the trendline, then, the bullish continuation scenario can still be considered.


(gbpjpy, 1h chart, 6/27)