Thursday, June 4, 2020
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Technical Analysis – GBP/JPY likely waiting for a trend reversal

GBP/JPY had uneventful trading for another week, remaining stuck between the 137.40 resistance and the 135.79 key support, which coincides with the 78.6% Fibonacci of the up-leg from 132.48 to 148.86. There is however a bullish divergence signal of a possible trend reversal, as the RSI and the MACD continue to print higher lows at a time when the price keeps trending downwards, suggesting that the market may soon change direction.

A strong rally above the previous high of 138.32 and more importantly above the 139.60 level could be interpreted as a validation of the bullish divergence warning. Before that, the price should first breach the 137.40 level.

Alternatively, a break below the 135.79 level and a decisive close under the 6 ½-month low of 135.36 could strengthen negative momentum, pushing support towards 133.40 and the 2-year low of 132.48 reached in January. Consequently, the medium-term outlook would shift even bearish.

In brief, GBP/JPY is trading neutral for the second week but the conflicting signs between the price and the momentum indicators are pointing to a reversal in the bearish trend. Meanwhile, the medium-term picture is holding negative.


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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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