The British pound against the Japanese yen has rallied strongly for the past two weeks. Last week, we saw sterling tentatively give up some of the recent gains following disappointing first quarter GDP data. The advanced quarterly and annually both missed expectations by one tenth of a percentage point. The Quarter on quarter reading came in at 0.3% and year over year printed at 2.1%.
Price action on the GBP/JPY daily chart shows the recent rally accelerated on the break of the 200-day SMA. Last week, price also cleared the 100-day SMA and appears poised to make a run towards the 148.50 resistance level. If that level is taken out, we could see sterling target the 155.00 area. It is around that area that price could form a bearish Gartley pattern. Point D is targeted with the 78.6% Fibonacci retracement level of the X to A leg and the 161.8% Fibonacci expansion level of the B to C move. If valid, we could see a bearish reversal target the 150.00 region.
The trade: Sell GBP/JPY at 155.25 with a stop loss at 156.25 and a take profit at 152.25. The Risk/Reward Ratio is 1:3