GBP/JPY technical analysis: Closed above 50-day MA for the first time since May 3

• GBP/JPY has found acceptance above the 50-day MA for the first time in four months.
• Monday’s bullish engulfing candle indicates the path of least resistance is to the higher side.

GBP/JPY closed above the 50-day moving average (MA) on Monday – the first daily close above the key average since May 3.

As of writing, GBP/JPY is trading at 132.53 and the 50-day MA is located at 131.66.

The pair’s last close above the 50-day MA was short-lived – the pair fell back below the average on May 6 and went to hit a low of 126.54 on Aug. 12.

The latest break higher, however, looks sustainable, as the 14-day relative strength index (RSI) is reporting bullish conditions with an above-50 print and the 5- and 10-day moving averages (MAs) are trending north.

More importantly, the pair created a bullish engulfing candle on Monday, signaling an upside break of the consolidation (or indecision) signaled by Friday’s inside bar pattern. Put simply, Monday’s candle marked a resumption of the rally from the recent low of 126.67.

All-in-all, the doors look open for a test of the immediate resistance at 133.85 (July 18 low). The bullish case would be invalidated if the cross finds acceptance below Monday’s low of 130.87.

Daily chart

Trend: Bullish

Technical levels