GBP/JPY Price Analysis: Eyes a bull flag breakout, focus on BOE, daily close
- GBP/JPY builds on Wednesday’s rebound towards 156.50
- The cross is teasing a bull flag breakout on the daily chart amid bullish RSI.
- BOE outcome eyed alongside a daily closing above the 156.50 hurdle.
GBP/JPY is looking to extend Wednesday’s impressive rebound from near the 154.50 region, having reclaimed the critical 21-Daily Moving Average (DMA) at 155.81.
The latest uptick comes ahead of the all-important Bank of England (BOE) interest rate decision and after the US Federal Reserve (Fed) disappointed the hawks, despite the $15 billion worth of tapering.
From a short-term technical perspective, GBP/JPY is approaching the falling trendline resistance of a potential bull flag, at 156.50.
A daily closing above that hurdle will confirm the bullish continuation pattern, opening doors for a rally towards the 160.00 level.
Ahead of that barrier, the multi-month highs at 158.22 will come into play.
The Relative Strength Index (RSI) has stalled its ascent but holds comfortable above the midline, backing the buying resurgence.
The 50 and 100-DMAs bullish crossover confirmed on October 28 also plays out in favor of the bulls.
GBP/JPY daily chart
On the flip side, a firm break below the falling trendline support at 154.37 could lead to the bull flag pattern failure, calling for a sharp drop towards the upward-sloping 50-DMA at 153.15.
The next line of defense is positioned at the horizontal 100-DMA at 152.71.
GBP/JPY additional levels to watch