GBP/JPY Price Analysis: Breakout of a prolonged consolidation demands a re-test at 158.00

• GBP/JPY is likely to pull back near 158.00 after a prolonged consolidation breakout.
• Rising 20 and 200-period EMAs add to the upside filters.
• The RSI (14) has settled in a 60.00-80.00 range, which signals more gains ahead.

After encountering resistance above 164.00, the pound/yen pair has given up its weekly gains. The selling pressure at these current levels seems to be a corrective retreat after a three-week winning run in the stock market.

On a weekly basis, the asset has had a breakthrough after nine months of extended consolidation, which occurred last week. The cross was auctioning in a flat channel, which indicates that volatility has contracted to an exceptional degree. It has moved higher following a breakout of the consolidation, which was in the region of 148.46-158.22 when the asset was first purchased.

Increased scaling of the 20-period and 200-period Exponential Moving Averages (EMAs), which are at 155.43 and 147.26, respectively, increases the strength of the upward filtering.

Moreover, the Relative Strength Index (RSI) (14) has switched to the upside, with a bullish range of 60.00-80.00 indicating the onset of a new impulsive wave in the near future.

The cross will begin to rise if it reaches the upper end of the flat channel at 158.00, at which point it will begin to move towards the previous week's high of 161.50, and then towards monthly highs of 164.65.

If the cross falls below the previous week's low of 156.38, on the other hand, yen bulls may take control of the market, dragging the asset towards the round level support of 154.00. If the latter is breached, the asset will be pushed towards the 50 EMA at 152.71.

GBP/JPY weekly chart