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GBP/JPY Rallying to a Key Trendline Resistance

The GBP/JPY has put in a price bottom last week when it rebounded from just under 176 for the 3rd time, this time breaking above the 180 handle. Then, we started this week with a brief pullback, but traders respected the price bottom and GBP/JPY bounced off the 200-period SMA in the 4H chart. This is a bullish slingshot signal, and price indeed extended higher.

GBP/JPY 4H Chart 2/11

(click to enlarge)

Now, as GBP/JPY continues to rally today, it will be approaching the 184 handle. Reaching 184 will essentially reach a bullish breakout target based on a range between 176-180 (400 pips). Also, the 184 level is likely to show resistance because of a falling trendline coming down from 2014's high at 189.70. Now, if price pulls back but remains above 180, then the 184 resistance will become more vulnerable.

GBP/JPY Daily Chart 2/11

(click to enlarge)

We can also see that GBP/JPY has bounced off the 200-day SMA, and the 61.8% Retracement level, keeping the long-term trend bullish. Thus while 184 should at first provide resistance, it will become weaker if price continues to respected the price bottom above 176.