Technical Bias: Neutral
Key Takeaways
- British pound is trading higher against the Japanese yen, but is likely to trade lower in the upcoming sessions.
- 172.65-90 is a major resistance area for the GBPJPY pair.
- GBPJPY support seen at 171.50 and resistance ahead at 172.85.
The Japanese yen weakened significantly against most major currencies, including the British pound. However, there is a high probability that the GBPJPY pair might correct lower in the short term.
Technical Analysis
There was an important bearish trend line on the 4 hour timeframe for the GBPJPY pair, which was breached earlier during the last week. However, the pair is trading around an important resistance area, which acted as a support earlier, and is likely to act as a hurdle for the British pound buyers. So, there is a chance that the pair might correct lower from the current or a bit higher levels. In that situation, it might fall towards the 100 simple moving average (SMA) – 4H, which is currently at 171.82. Any further downside acceleration should see buyers around a critical confluence area of 50 SMA (4H), and the 50% Fibonacci retracement level of the last leg higher from the 170.45 low to the recent high.
On the upside, initial resistance can be seen around the 200 SMA (4H), followed by the highlighted resistance area at 172.65-85. There is a minor divergence noted on the 4-hour RSI as well, which might cause a pullback in the pair in the near term. The 4-hour RSI is around the extreme mark, which adds to the view of a short-term correction.
Moving Ahead
Overall, as long as the pair is trading below the highlighted resistance area it might correct lower towards the 100 SMA (4H) in the near term. There is no economic release in the upcoming session in the UK, so the pair might be driven by market sentiment.
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