GBP/JPY pauses post-rally; sellers halt further advances.
GBP/JPY has taken a breather after sellers denied further gains. They reversed the price back below 140.34, which is the 61.8% Fibonacci retracement of the down leg from 148.86 to 126.53, following the rally that commenced 10 October.
The momentum indicators concur with the stall in the positive outlook and this is backed by the flat Tenkan-sen and Kijun-sen lines. The RSI is reflecting a marginal improvement in positive momentum, as it is pointing up slightly below the 70 level. The MACD however, currently in the positive region, conflicts, as it has declined below its red trigger line. Despite this, it is still deep in a positive area, so caution is warranted in case buyers pick up as the simple moving averages (SMAs) are all still rising.
With positive signals intact, initial resistance could come from the 61.8% Fibo of 140.34, before the five-month high of 141.47 – where the bears dominated – is retested. Moving higher, the nearby resistance border of 141.72 to 142.20 could provide some downside pressure, challenging the bulls. Overcoming this obstacle, the 76.4% Fibo of 143.60 could come into focus.
To the downside, if the sellers resurface, the Kijun-Sen line at 138.60 could restrict the drop to test the 50.0% Fibo of 137.70. Moving below 137.70, a sell-off could come to rest at the 135.65 support coupled with the 50-period SMA. Surpassing the Ichimoku cloud, the pair could encounter the 100-period SMA at 134.00 followed by the 200-period SMA residing at the 133.35 support.
In brief, a break above 141.72 would extend the short-term positive picture, while a break below 134.60 would return the bias back to neutral.
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