GBPJPY is printing its eighth consecutive red tiny candle following its second rejection from the 50-day simple moving average (SMA).
The price has slipped below the 38.2% Fibonacci retracement of the 124.00 – 142.69 upleg, and there appears no key obstacle in sight to prevent the decline from reaching the 50% Fibonacci of 133.30 as the RSI continues to decelerate towards its 50 neutral mark. The MACD is also gaining negative momentum, while the red Tenkan-sen is set to cross below the blue Kijun-sen, all reflecting increasing caution in the market.
A close below the 50% Fibonacci of 133.30, and more importnatly beneath the previous low of 133.00, could trigger another bearish extension towards the 131.74 – 131.11 area formed by June’s trough of 131.74 and the 61.8% Fibonacci respectively. Such a move would officially violate the upward pattern in the medium-term picture and confirm the start of a downtrend initially suspected from the pullback on the broken ascending trendline, which seems to be the bottom line of an upward-sloping channel.
In case the pair returns above the 38.2% Fibonacci of 135.50, the bulls may push harder to breach the 50-day SMA currently around 137.00. If they succeed this time, they should also clear resistance between October’s peak of 137.80 and the 23.6% Fibonacci of 138.22 to re-challenge the ascending trendline.
In brief, GBPJPY is expected to maintain its bearish mood in the short term, likely bringing the 133.00 level next under the spotlight. Otherwise, a rebound above 135.50 may see a recovery towards 137.00.
