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139.75 remains the key level to watch: GBP/JPY technical analysis

By Nathan Batchelor

17:33, 6 August 2020

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GBP/JPY technical analysis

The GBP/JPY is trading at a critical juncture, as the fast move pair continues to its upside move towards the 140.00 resistance level.

GBP/JPY analysis shows that the pair is approaching major monthly technical resistance, around the 139.75 level.

GBP/JPY medium-term price trend

The British pound is approaching key technical resistance against the Japanese yen currency, following two consecutive weeks of strong gains.

GBP/JPY technical analysis shows that a massive head-and-shoulders pattern will be invalidated if the pair reaches the 139.75 level.

GBP/JPY technical analysis

The daily time frame shows that the bearish price pattern has over 1,000 points of downside potential.

If the invalidation occurs, the GBP/JPY pair could rally towards the 150.00 level over the medium-term. 

It is noteworthy that the 136.00 and 134.50 levels are key support levels that traders may look to re-enter into the bullish trend if a pullback takes place from current levels. 

GBP/JPY short-term price trend

GBP/JPY technical analysis shows that the pair is bullish over the short term, while the price trades above the 137.50 support level.

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16,849.25 Price
-1.080% 1D Chg, %
Long position overnight fee -0.0500%
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5.75 Price
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0.38 Price
-2.110% 1D Chg, %
Long position overnight fee -0.0500%
Short position overnight fee 0.0140%
Overnight fee time 22:00 (UTC)
Spread 0.00332

The four-hour time frame currently shows that the GBP/JPY pair is trading within a symmetrical triangle pattern.

GBP/JPY technical analysis

According to the size of the neutral pattern, the GBP/JPY pair could stage a 100 point directional move.

Bulls need to move price above the 138.70 level to encourage a bullish breakout.

To the downside, sellers need to breach the 137.70 level to force a bearish breakout from the triangle pattern.

Overall, an upside move should be expected, given the prevailing bullish trend over the short and medium-term.

GBP/JPY technical summary

GBP/JPY analysis shows that a bearish pattern with 1,000 points of downside potential will be invalidated if the price moves above the 139.75 level.

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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