GBP/JPY has been indecisive since its plunge to a 2 ½-month low of 147.95 on Wednesday, moving sideways between 149-150. The market, however, lacks positive sentiment as technical indicators suggest that a move to the downside is a more likely outcome in the near future.
The Relative strength index (RSI) seems to be gathering negative momentum as it has started to increase its rate of drop below the neutral zone of 50, while Stochastics are moving lower to meet oversold levels below 20. Moreover, the pair itself sends negative signals as market actions are currently taking place below the 20-period simple moving average line (SMA) and the Ichimoku cloud.
Should prices head down, the previous low at 147.95 could offer nearby support. In the worst scenario, GBP/JPY could reach fresh troughs, dropping towards the 147 psychological mark.
Otherwise, if bullish moves prevail, 149.39, which is the 23.6% Fibonacci of the down-leg from 154.03 to 147.95 could provide strong immediate resistance as the 20-period SMA is also located in this area. Therefore, if the market manages to close above this level, we would probably see prices crawling up to the 38.2% Fibonacci of 150.31 and then to the 50-period SMA of 150.55. More extended rallies have also the potential to find resistance at the 50% Fibonacci of 151.02.
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