GBP/JPY consolidates after a strong start to the week.

GBP/JPY paused Tuesday’s sell-off near the 20-day moving average (MA) on Wednesday and bounced back into the 146 area. The cautious sentiment, though, has not fully faded as the RSI has yet to show clear positive direction above 50, while the MACD continues to lose strength below its red signal line but with slower speed, both suggesting a neutral bias for the short-term.

A reversal southward could meet the 200-day MA and the 23.6% Fibonacci of the up leg from 132.49 to 148.55, around 144.63. A failure to hold above this level could open the way towards the 143.11-142.41 area encapsulated by the 50-day MA and the 38.2% Fibonacci. Breaking that restrictive area too, the sell-off could pick up steam under 141, the previous low of recent uptrend.

In the positive scenario, further, improvement has the potential to retest resistance around 146.65, taken from Monday’s closing price. Slightly higher, the noisy region between 147.20 and 148.55 could halt upside movements as well, though investors would be more eager to buy the pair if the price successfully crawls above the 149.50 roof – in which case the neutral medium-term outlook would also turn positive.


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Source: XM

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