GBPJPY recouped Tuesday’s downfall that led the price near the almost three-year low of 126.53 and the doji candle registered early in August. The positive movement, however, remains fragile and the market is still exposed to downside risks as the RSI continues to move below its 50-neutral mark and the MACD keeps fluctuating in the negative area and around its red signal line.
An extension above the August 22 high of 130.68 and the descending trend-line could boost confidence on the recent rebound and increase buying interest, while a climb above the 50-day simple moving average (SMA) could see a retest of the 133.00 mark. Moving higher, the bulls would have to push harder to overcome the 135.50 obstacle and exit the Ichimoku cloud.
On the other hand, the 126.53 bottom will come back in the spotlight if the bears retake control. Should the sell-off stretch beneath that border, the door would immediately open for the 125 level and then for the 123.80 number where the post-Brexit referendum downfall was halted on October 2016. If the latter were to break too, the next target will be the 122 handle.
In the three-month window (medium-term), a rally above 135.50 would resume neutral conditions, though, with the 50-day SMA increasing its distance below the longer-term 200-day SMA, hopes for such a correction are currently viewed as minimal.
Summarizing, a closing price above 130.68 could put GBPJPY back on the bullish path in the short-term, while in the medium-term a sharper upside above 135.50 is required to activate a neutral profile.
