GBPJPY has been trading in a descending channel for over two years. Several tests at the lower channel have been met with support as the most recent attempt was during the pandemic months.
Since then we have witnessed a move to the median regression, which has led to further upside. Currently, prices are hovering above the top border of the Ichimoku cloud, which is a confluence of the 38.2% 156.25/123.93 downside Fibonacci leg.
Should we witness a spike in momentum, this could lead to a hidden bearish divergence. Prices could then first fall towards the mean, before reverting towards the cloud and then the upper channel.
This would mark the 50% area, with the next target being the golden ratio of 61.8%.
A look on the 4-hour chart shows a bullish bias in an ascending channel. Prices are now moving away from the cloud which indicates that the bias remains on the upside.
The next test at the median regression will show if the recent hidden bullish divergence will be validated. This would lead to movement past the mean and towards the upper channel.
If the currency pair can move past the said barrier, it will break the recent highs.