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GBP/JPY Deep Dive: Next High Inbound?

Looking at GJ on the Weekly chart, we can see that price has been quite range-bound over a wide range of pips over the past three years or so. Price is constantly jumping back and forth but does not seem to be making a new high over 158.0 or below 122.0. This does not necessarily mean much as this is still a 3,600-pip range; however, it is definitely worth noting now that price is heading towards this high again.

On the H4 chart, price is moving quite choppy between this 153.450 - 154.700 range, which 153.450 was actually seen as clear resistance back in April, but is now confirmed as new support in recent market moves.

A breakout in either direction could dictate where price is heading next. If price successfully breaks, retests and confirms 154.7 as new support, we will most likely see GJ continue heading higher. On the flip side, if we see price successfully break, retest and confirm 143.450 as new resistance, we will most likely see GJ heading back down again, either to make the next swing low or collect liquidity and orders from the 151.0 - 152.0 area.

Looking at retail sentiment above, we can see that most traders are short on this pair. As usually retail traders are incorrect, we could see banks and other major financial institutions possibly push price higher to the upside, taking out retail trader's positions.

The JPY currently has a fundamental bearish bias as the market's overall risk tone has considerably improved following the pandemic, with positive news about increasing vaccinations and ongoing monetary and fiscal policy support paving the way for a global economic recovery.

The GBP's fundamental outlook remains bullish. The economic rebound in the UK remains strong and has been much better and faster than most optimistic forecasts. This has also led the BoE to turn less dovish with sizeable upgrades to their economic projections and market expectations for the next move in interest rates to be up.

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