- The formation of an ascending triangle chart pattern indicates a volatility contraction.
- Advancing 50-EMA indicates that the upside bias in the short term is still solid.
- A 40.00-60.00 range oscillation by the RSI (14) indicates that investors are awaiting a trigger for a decisive move.
The GBP/JPY pair has corrected after facing barricades around the psychological resistance of 160.00 in the Asian session. The cross has slipped to near 159.50 and is likely to remain on tenterhooks amid volatility contraction. Trading activity is expected to remain quiet as Japanese markets are closed on account of Coming of Age Day.
On an hourly scale, the cross is auctioning in an Ascending Triangle chart pattern that signals a volatility contraction. Usually, a volatility contraction is followed by a breakout, which results in wider ticks and heavy volume. The horizontal resistance of the aforementioned chart pattern is plotted from January 4 high around 160.20 while the upward-sloping trendline is placed from January 5 low at 158.52.
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