GBP/JPY technical analysis: Plummets back closer to multi-year lows

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  • Extends last week’s bearish break below a symmetrical triangle.
  • Extremely oversold conditions warrant caution for bearish traders.

The GBP/JPY cross remained under some heavy selling pressure for the third consecutive session on Tuesday and has now dropped back closer to multi-year lows set on August 12.
 
Last Friday’s decisive break through a symmetrical triangle was seen as a key trigger for bearish traders and a strong follow-through selling amid increasing odds of a no-deal Brexit.
 
This coupled with reviving safe-haven demand provided an additional boost to the Japanese Yen and further collaborated to the pair’s ongoing slide back below the 127.00 handle.
 
However, technical indicators hourly charts are pointing to extremely oversold conditions and thus, warrant some caution before initiating any aggressive bearish bets.
 
Hence, any subsequent slide seems more likely to find decent support near multi-year lows, around the 126.55-50 region, which if broken should pave the way for a further depreciating move.
 
On the flip side, any attempted bounce might now confront some fresh supply near the 128.00 handle, above which the recovery could further get extended towards mid-128.00s en-route the 129.00 mark.

GBP/JPY 4-hourly chart

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