GBPJPY recorded an impressive rally on Thursday, closing above the 200-day (simple) moving average (MA) for the first time since May. The pair continues its bullish run today, printing fresh highs above the previous peak of 149.29. An indication that the rebound off 139.88 could hold for longer in case the price manages to finish the day substantially above the aforementioned peak.
Technically, the market is located in overbought territory given that the RSI has climbed above 70 and the Stochastics are in a sideline move above 80. While these are warning signals that a price reversal may be around the corner, the red Tenkan-sen line has increased its positive momentum above the blue-Kijun-sen line supporting that the upside is not likely to end at least in the near term.
Should the pair extend gains, the 4 ½ -month high of 149.70 marked early on Friday could come into view again. Slightly higher the 150 round-level may be another resistance point to keep in mind before attention turns to 150.68, the low on April 20. If the latter proves to be a weak obstacle as well, eyes could turn to 152.71, taken from the high on April 26.
In the alternative scenario, a reversal to the downside and particularly a break beneath the previous peak of 149.29 could find support between 147.83 and 148.23 formed by June’s peaks and the 200-day MA. The area offered some support back in March as well. Even lower, bears could try to cross below 147.00 which formed a strong barrier to downside movements several times in the past, while steeper declines may target the area around 146.00 too.
In the medium-term picture, GBPJPY has traded neutral over the past three months, though as long as the 50-day MA shows no appetite to reverse the bearish cross with the 200-day MA, chances for the negative outlook to reemerge are high.
