GBPJPY has started to trend higher on the short-term time frames, with a rising channel just forming on the 4-hour and 1-hour charts.

Price got rejected on its latest test of the resistance and may be ready to head back towards support.

For now, the mid-channel area of interest is keeping losses in check and might actually be able to send the pair back up to the top. Still, a larger pullback could last until the bottom of the channel at the 182.50 minor psychological support.

The 100 SMA is above the 200 SMA so the uptrend might continue but the short-term moving average appears ready to make a downward crossover to indicate a potential selloff. If so, a break below the channel might occur. Stochastic and RSI are both pointing down so bears are in control.

Event risks for this trade setup include the BOJ statement later on this week, as traders are anticipating dovish remarks or actual easing announcements from the central bank. Data from the UK has surprised to the downside since its GDP reading missed expectations, but the BOE remains on track to tighten monetary policy sometime next year.

In terms of economic releases, only medium-tier reports are lined up from the UK today. These are the net lending to individuals, mortgage approvals, and CBI realized sales data. Japan is set to print its household spending and CPI readings before the BOJ statement tomorrow.

By Kate Curtis from Trader’s Way