GBPJPY Symmetrical Triangle (Feb 14, 2017)

Price is getting ready to test the resistance around the 142.50 minor psychological level and could be due for a bounce or a break. 

The 100 SMA seems to be crossing above the longer-term 200 SMA to suggest a potential upside break. If so, the pair could climb by an additional 900 pips, which is roughly the same height as the chart formation. Similarly, a downside break below support at 140.00 could send price lower by 900 pips. 

Stochastic is indicating overbought conditions and turning lower could draw more sellers to the mix, allowing the triangle resistance to keep gains in check and push GBPJPY back to the bottom of the chart pattern. 

UK CPI is up for release today and analysts are expecting a gain from 1.6% to 1.9% in the headline figure and a rise in the core figure from 1.6% to 1.7%. Stronger than expected data could reinforce BOE official Forbes' views that a rate hike should be considered to prevent inflation from rising out of control. 

Later on in the week, the UK will print its jobs figures, likely showing a 1.1K rise in claimants for January and no change in the average earnings index at 2.8%. UK retail sales is expected to show a rebound from the 1.9% drop recorded in December.

As for the yen, market sentiment has been pushing the lower-yielding currency around, although it has been sensitive to currency-specific data. Over the weekend, Japan printed a weaker than expected preliminary GDP reading of 0.2% for Q4 versus expectations at 0.3%. 

By Kate Curtis from Trader's Way