GBPJPY has shifted its short-term bias back to the downside after a recent rally from 138.66 stalled at 147.77 on July 11 and prices dropped.

Support is currently provided by the 50-day moving average which is located close to the key 144.00 level, helping pause the market’s decline.

The near-term bias remains to the downside, as suggested by the downward sloping RSI. The oscillator has dipped below 50, also indicating bearishness. A break below the 50-day MA would accelerate a decline in prices towards support at 141.81. This level is the 50% Fibonacci retracement level of the upleg from 135.60 to 148.10 (April 17 to May 10). From here, there is scope to drop to the 61.8% Fibonacci at 140.34. A break below the June 12 low of 138.66 could see prices re-test the April 17 low of 135.60.

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Meanwhile, in the longer-term view, a double top chart pattern could be forming and would be confirmed if GBPJPY falls below 138.66. Such a move would bring about a bearish outlook for the pair, especially if the market remains below the daily Ichimoku cloud.

Only a move back above 145.11 (23.6% Fibonacci) would weaken the near-term bearish bias and may open the way for prices to target the 147.77 July 11 high before reaching the key 148.00 area. From this level, the market could resume its recent uptrend.

The short-term bias is bearish and the medium-term bias is neutral unless a double-top pattern is confirmed.

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