GBPJPY fell sharply yesterday from a high of 146.80 to a low of 144.37 before steadying. Despite the big drop, the technical picture on the 4-hour time frame remains neutral, with prices trading in a broad range between 144.00 and 147.00 since mid-July.
Downside pressure remains since the market has fallen below the Ichimoku cloud and the RSI is now in bearish territory below 50. Prices would need to bounce back above 145.60 to weaken the risk of further declines. A move above strong resistance at 147.77 would see a resumption in the recent uptrend.
Immediate support was found at 144.36, which happens to be the 38.2% Fibonacci retracement level of the rise from 138.66 to 147.77 (June 12 to July 11). From here, strong support is expected at the key level of 144.00 which was tested on July 24. If support at this level fails to hold, then the short-term bias would shift from neutral to bearish. The next level to focus on would be the June 28 low of 143.26. Reaching this point would result in a 50% retracement of the 138.66 to 147.77 upleg, which would confirm a shift in trend.
For now, there are no clear signs of a reversal in the current trend, which remains neutral in the short-term, as long as the market remains above 144.00. In the bigger picture, the uptrend from 138.66 to 147.77 (June 12 to July 11) remains intact and the fall from 147.77 is seen as a corrective move.
