GBP/JPY Pulls Back to Expected Resistance

4H: The GBP/JPY did not reach the 127.50 area as anticipated, but was rather supported above 128.00. In the 4H chart, the market shows a strong reversal, now testing the 50SMA.

Now shown here (can see in 1H chart), the current area at 130.20, is the 61.8% retracement of the latest downswing, and is expected to provide some resistance.

A break above that shows the current bearish attempt is complete, and a bullish attempt is taking over and the market should reach 131.50 next.

Watch for the RSI. It should not go above 60. If it does, and sustains, the market has turned bullish and targets at least the 132.80/133.00, which is the equilibrium (50% retracement) of the range found in the daily chart between 138.00 and the new low at 128.00

Day: As the daily chart shows, the market is right above an important support before turning up.The bullish candle is strong if closed at where it is now.

However, the mode is still bearish, as reflected by the moving averages. (The short 50-period MA is below the longer 200-period MA).

Also note the bullish divergence. If the current rally fails to break above the 132.80 area, the market is likely to remain ranging if not bearish.