GBP/JPY still trading in an upward sloping channel.
GBP/JPY has been stuck in a channel tilted to the upside since the beginning of March. The cautiously bullish picture in the short-term looks set to last for a while longer after prices failed to break to the downside of the lower channel earlier this week.
Support was met at around the 148.80 regions, forcing the pair to reverse higher. The deterioration in the momentum indicators supports a positive to neutral bias in the near-term. The %K line of the stochastic oscillator has risen sharply above the oversold zone and recorded a bullish crossover with the %D line. However, the RSI indicator is flattening near the 50-neutral level, suggesting any upside movement will be weak.
If the price continues to head higher, resistance could come from the 38.2% Fibonacci retracement level at 149.40 of the down-leg from 156.60 to 145.00, which stands very close to the current market price. A rally above this level would reinforce the short-term bullish view and open the way towards the 150.60 level. The range around this point has been a major resistance area in the past.
On the flip side, should a downside reversal take form, immediate support will likely come from the ascending trend line, near the 148.80 level. A break below this barrier could shift the bias back to a bearish one, with the next support coming from the 23.6% Fibonacci around 147.70.
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