GBP/JPY is in red for the fourth consecutive week, with the price pausing the sell-off at the 4 ½-month low of 137.85 on Wednesday. According to the RSI and the Stochastics, the pair is trading in the oversold area and upside corrections are possible in the short term as the former hovers below 50 and the latter under 20. The bullish doji created yesterday could be another sign that a price reversal may be in progress.
Should the market beat key resistance around 139.60, the door would open for the 50% Fibonacci of 140.68 of the up leg from 132.48 to 148.86. Higher, the 38.2% Fibonacci of 142.58 could be the next target if the price manages to overcome the May 21 high of 141.70.
Alternatively, the decline may get new legs below the 137.40 strong support area, turning the spotlight towards the January 4 low of 135.79. Further down, another important barrier may appear around 133.40.
In the medium-term picture, GBP/JPY is strongly bearish as long as the price holds below 142.66.
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