• GBP/JPY has formed a right-angle triangle which indicates a likely breakout higher. 
• The MACD momentum indicator is diverging bearishly with price, however, suggesting a mild downside risk.  

GBP/JPY has formed a right-angle triangle which indicates a breakout higher is likely. 

Price is more likely to break above the flat edge, according to technical analysis (TA) theory, which in this case runs along the topside of the pattern. 

GBP/JPY 4-hour Chart 

(Click on image to enlarge)

A decisive breakout above the top of the triangle would activate the pattern’s first upside target at 199.59, the 61.8% Fibonacci extrapolation of the height of the triangle (at its widest point) higher. This is the usual TA method for forecasting such moves. 

One bearish sign is that the Moving Average Divergence Convergence (MACD) momentum indicator has been diverging bearishly with price during the formation of the triangle. Whilst price has made a higher high, MACD has declined. This is a mildly bearish sign. 

A decisive breakout would be one accompanied by a long green candlestick that pierced cleanly through the top of the triangle at 196.00 and closed above near its high. This, or three green candlesticks in a row that broke cleanly above the flat top of the pattern. 

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