GBPJPY has a neutral intra-day bias and has been trapped between the key round level of 142 and 143 today. Short-term momentum oscillators (on the 4-hour chart) are moving sideways, indicating the start of a consolidation phase in the market.
Looking at the bigger picture, GBPJPY declined from the August 3 high of 146.80 to reach a low of 139.30 on August 24. An attempt to rebound from the multi-month low found resistance at 143 as RSI reached overbought levels at 70 and upside momentum faded. The 143-level has acted as resistance in mid-August and so it’s seen as a strong barrier to upside moves.
If support at 142 fails then GBPJPY would come under increased pressure with scope to reach the key 140-level and possibly re-test the low at 139.30. A deeper decline would suggest a top is in place at 143 and GBPJPY would resume the downtrend that started from the July 11 high of 147.77.
Alternatively, a sustained move above the top of the range at 143-resistance would indicate that the intra-day neutral bias has ended and prices would target 144. This could shift the short-term bias to bullish. Since the market is above the Ichimoku cloud and both RSI and MACD are in bullish territory, another push higher cannot be ruled out.
The underlying medium-term trend is neutral-to-bearish since July but it is unclear yet whether the bounce from 139.30 is a mere correction of the July-August downtrend.
