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- GBP/JPY bullish due to multiple indicators.

- Bullish wedge and monthly pivot swing

- Yen direction to be dictated by risk sentiment

The outlook for the Pound-Yen exchange rate favours more upside as the pair continues the uptrend it began after the 132.000 December lows.

GBP/JPY is trading at 147.59 at the start of the new week after rising almost two and a half percent in the week before. The gains came mainly as a result of Pound strength after markets increased bets that a 'no deal' was an unlikely scenario after Prime Minister Theresa May opted to give parliament a vote on delaying Brexit should her deal fail to get passed before March 29.

The uptrend has been supported by a weakening Yen, after the news the U.S. will be delaying the introduction of higher tariffs on March 1 (Friday). The Yen, which benefits from safety flows, fell on the news as investors moved out of safe-haven assets into higher-yielding bets.

From a technical perspective, the outlook favours more upside as the pair continues the uptrend it began after the 132.000 December lows, which looked like ‘exhaustion lows’ punctuating the end of the downtrend.

The long bullish wedge pattern has now broken out higher, suggesting substantially more upside to come. A break above the September 2018 highs at 150.000 would provide confirmation of an extension to an upside target at 153.02 at the level of the 200-week moving average (MA).

The RSI momentum indicator supports a bullish outlook. It is at the same level as the September 2018 highs when the exchange rate was higher. This suggests ‘pent up’ bullish potential.

The monthly chart shows a ‘pivot swing’, which is another bullish signal, especially medium-term.

The pivot swing occurs over a period of three months in which the exchange rate falls, forms a new trough low, rotates and breaks above the previous month’s high.

The successful break above the December highs at 145.55 on the monthly chart gave a bullish pivot swing signal on GBP/JPY. The hammer pattern which formed during the month of January is a further bullish sign.

The daily chart suggests a more cautious bullish stance is warranted. Here we note how momentum has moved into the overbought zone signaling exhaustion and a higher likelihood of a pull-back occurring. Whilst it doesn't necessarily mean the uptrend has finished it could mean it will stall or pull-back.

One possibility is that it will pull-back down to the level of the upper border of the falling wedge pattern at around 146.00 and find support there before resuming its uptrend.

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