Technical Bias: Bearish
Key Takeaways
- British pound moved lower against the Japanese yen recently to trade as low as 170.40.
- A short-term correction is possible which can be seen as a selling opportunity.
- GBPJPY support seen at 170.80 and resistance ahead at 171.80.
The Japanese yen gained traction against the British pound recently. It looks like that the GBPJPY might correct a bit higher from the current levels but upside might be limited moving ahead.
Technical Analysis
The GBPJPY pair during this past week broke an important support area of 172.60 to trade lower. This particular break was very critical as it caused a 200 pip fall in the pair. There is now a bearish trend line forming on the 4 hour chart, which is also coinciding with the 100 simple moving average (4H) around the 171.90 level. Moreover, the 38.2% Fibonacci retracement level of the last drop from the 174.22 high to the 17.41 low also sits around the mentioned level. So, there is a cluster of resistances around the 171.80 area. If the pair continues trading higher and test the mentioned area then it is likely that the British pound buyers might struggle to take the pair above the bearish trend line. If the GBPJPY pair manages to break the 172.00 barrier and settle above it, then a move towards the 200 SMA (4H) is possible in the short term.
On the downside, initial support can be seen around the 170.80 level, followed by the last swing low of 170.40. The 4 hour RSI has just managed to close above the 50 mark, which is a positive sign in the short-term and could take the pair towards the 100 SMA (4H).
Moving Ahead
Overall, as long as the pair is trading below the highlighted bearish trend line more losses cannot be denied, and every rally can be seen as a selling opportunity.
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