GBP/JPY coiling just below key long-term resistance

GBP/JPY, a pair with a well-earned reputation for volatility, has spent the last couple of months seeing every smaller swings. As the chart shows, the pair has been putting in lower highs and higher lows, forming a classic symmetrical triangle pattern, for the past nine weeks since failing to break above its April high.

Coincidentally or not, the pair’s year-to-date high coincides almost perfectly with the 61.8% Fibonacci retracement of its 2015-2016 drop at 168.83, showing that this year’s high represents a significant longer-term level of resistance.

Looking ahead, prudent traders may want to watch for a breakout beyond the current symmetrical triangle to signal the next higher-probability swing, with a break below this week’s low opening the door for a deeper retracement toward 160.00 or 158.00, whereas a bullish breakout could signal another run toward key resistance in the mid-168.00s next.