GBP/JPY printed a 3 black crows’ pattern and broke fiercely through the 25-month low.
GBP/JPY had sellers take the reins, after indecisive candles from the previous week, forming a 3 black crows’ pattern and eating up the 133.85 swing low and the twenty-five-month low of 132.48. Buyers then came on board but failed to close above the 132.48 low, now turned to resistance. Moreover, the sellers hit back harder with a large engulfing bearish red candle and reignited the sell-off. It’s worth mentioning the indicated strength behind the down move, as shown by the Tenkan-sen accelerating down, and the simple moving averages’ (SMAs) bearish demeanor.
The MACD and the RSI are suggesting more negative directional momentum. The MACD closed below its red trigger line in the negative zone and declines further, whilst the RSI is currently in the oversold region pointing down. The ADX is showing a strong downward trend in place.
Heading south, the pairs’ first support will come from 128.75, the July 2016 low. A fracture could then lead to the 126.22 area, which is the 138.2% Fibo retracement level of the up leg from 132.48 to 148.85. If selling interest keeps up, the 124.00 -123.97 area could be the next support obstacle, which is the low of October 2016. Finally, if losses spiral the 122.40 level, which is the 161.8% Fibo could unfold.
To the upside, a run-up past the resistances of 132.50 and 133.85 would find some pressure at 135.65, which is the swing high coupled with the 50-day SMA. A further push north above 138.70 would turn the bias to neutral.
Summarising, a dominating short-term bearish bias exists, and only a close above the 146.50 high could shift it to bullish.
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