- GBP/JPY gained strong positive traction for the second consecutive session on Thursday.
- Sustained move beyond the 140.40-50 supply zone has set the stage for additional gains.
- Only a sustained break below the 140.00 mark will negate the near-term bullish outlook.
The GBP/JPY cross built on the previous day’s strong positive move and continued scaling higher through the first half of the trading action on Thursday. The momentum pushed the cross further beyond the 140.40-50 heavy supply zone, to fresh monthly tops in the last hour.
Given this week’s solid rebound from a three-month-old ascending trend-line support, some follow-through buying beyond the 140.70 region will be seen as a fresh trigger for bullish traders. This, in turn, should pave the way for a further near-term appreciating move.
The constructive set-up is reinforced by the fact that technical indicators on the daily chart are holding comfortably in the positive territory. However, RSI on hourly charts is already flashing overbought conditions and warrants caution for bullish traders.
That said, the momentum seems strong enough to push the GBP/JPY cross further beyond the 141.00 mark, towards the 141.40 region. The bullish trajectory could get extended to September daily closing highs, around the 141.75-80 region en-route the 142.00 round-figure.
On the flip side, any meaningful pullback below the 140.50-40 resistance breakpoint might now be seen as a buying opportunity. This, in turn, should help limit the downside near the key 140.00 psychological mark amid hopes for an imminent Brexit deal.
Only a convincing break below the mentioned support levels will negate the near-term bullish outlook and prompt some aggressive technical selling. The GBP/JPY cross might then turn vulnerable to break below the 139.00 mark and test the next support near mid-138.00s.
GBP/JPY daily chart
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Technical levels to watch
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