GBP/JPY had a strong bounce off on the upper boundary of the descending channel around 146.50 in the previous week, dropping towards a fresh almost two-month low of 142.86 today. The price also plunged beneath the Ichimoku cloud and the 23.6% Fibonacci retracement level of the up leg from 132.50 to 148.86 around 142.60. From the technical point of view, the price could lose some more momentum in the short-term as the stochastic oscillator is holding in the oversold area.
If the 38.2% Fibonacci of 142.60 proves easy to get through, the spotlight will turn to the return line of the channel around 141.80 ahead of the 141.00 level and the 50.0% Fibonacci of 140.65.
On the other hand, a rebound on the 38.2% Fibonacci could send prices towards the 143.70 resistance barrier before challenging the critical level of the lower surface of the Ichimoku cloud, which coincides with the 23.6% Fibonacci of 145.00 and the 20-day simple moving average. A successful jump above this obstacle could open the way towards the 146.50 resistance, near the downtrend line.
In the short-term picture, GBP/JPY has been trading within a downward sloping channel over the last month, shifting the bullish bias to bearish. The market still has some room to fall before returning higher.
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