GBPJPY previously busted through the top of its descending channel on the daily chart to signal that a reversal is underway. Price has since completed its retest and bounced off the broken channel top to confirm that bulls are setting their sights higher.

Applying the Fibonacci extension tool shows just how high the pair might go. Price has already moved past the 38.2% level and is currently testing the 50% extension at the swing high. Stronger bullish pressure could take it to the 61.8% extension around the 150.00 major psychological mark or the 78.6% extension at 151.50. The full extension is near the 154.00 handle.

Also note that a break past the current levels could confirm an inverse head and shoulders formation. This could be followed by a rally that’s the same height as the chart formation, which spans 140.00 to around 150.00.

However, the 100 SMA is below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, there’s still a chance for the selloff to resume. Then again. price has moved above the 200 SMA dynamic inflection point as an early indication of bullish momentum and the gap between the moving averages is narrowing.

Stochastic is already in the overbought zone to signal exhaustion among buyers and turning lower could spur a return in selling pressure. RSI has some room to climb so buyers could stay in control, but the oscillator seems to be turning back down as well.

The pound is keeping its head afloat in hopes that the UK government and the EU could come up with a transition deal soon. There have been rumors that the timeline involves PM May presenting a deal to Parliament by Wednesday, in time for a special EU Summit on Brexit before the end of this month.