GBPJPY has reversed back down again after finding resistance on the 149.30 high achieved on Monday and completed three straight bearish days. Furthermore, the price tumbled below the 200-simple moving average in the medium-term as well as below the 50.0% Fibonacci retracement level of the upleg from 143.75 to 149.30, near 146.50.
In the 4-hour chart, the momentum indicators are pointing to a negative bias, with the RSI sloping to the downside near the threshold of 30. The MACD oscillator is moving lower in the negative area below its red-trigger line.
In the event of an upside reversal, the 50.0% Fibonacci (146.50) could act as a barrier before being able to re-challenge the 38.2% Fibonacci, which stands slightly below the 147.25 resistance obstacle. A break above this level would shift the short-term bearish outlook to a more neutral one as it would take the price until the 23.6% Fibonacci of 148.00, which holds near the 40-SMA.
On the flip side, further losses should see the 61.8% Fibonacci of 145.87, which it failed to touch early this morning. A drop below this significant hurdle would endorse the bearish picture and push the pair until the 145.20 support.
Overall, GBPJPY seems to be in bearish correction rally and holds well below the short-term moving averages (20 and 40).
However, we have seen the dollar index pulling back from this level on the back of the news that US president isn’t happy with the situation. If the president does start to press hard on this issue, we would have a major problem for the dollar index. One thing is for certain, it is in president’s favour that the interest rates should remain low given the fiscal policy his team is adopting.
