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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This information is not considered as investment advice or investment recommendation but instead a marketing communication. This material has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.

Source: XM

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