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GBP/JPY Coming off a Price Bottom

The 4H GBP/JPY chart shows a market breaking out of a price bottom formed over the past couple of weeks above the March low at 176.48. 

GBP/JPY 4H Chart 4/8


(click to enlarge)

After a break above 178.43 price retreated from 179, but found support around 177.65. Trader's essentially respected the middle of the consolidation range (price bottom). Also, the crossover above the 50-, and 100-period simple moving averages and then using them as support,  is a good sign for a bullish reversal. Furthermore, the bounce off the 50-period SMA formed a bullish engulfing candle that signals at least a near-term bullish outlook.

The near-term bullish outlook will be challenged if price approaches the 180 psychological level. 180 is also likely reinforced by a falling trendline and the 200-period SMA. It is also in the middle of a previous common resistance area.

A break above this cluster of resistance would open up the 185, February high. For this scenario, look for price to start holding above the currently formed price bottom.