GBPJPY closed decisively above the descending trendline and the 150.50 bar on Wednesday after an intense battle around that bar during the past two weeks, raising hopes for more progress ahead of the Bank of England’s policy announcement at 12:00 GMT today.
The spotlight is currently on the 23.6% Fibonacci retracement level of the latest downfall at 151.14 and the 20-day simple moving average (SMA) slightly above. Another prosperous session here could further bolster buying appetite, likely sending the price straight up to the 38.2% Fibonacci of 152.49, where the 200-day SMA is also flattening. The restrictive ascending trendline slightly at 152.75 could cement that ceiling, delaying any moves towards the 50% Fibonacci of 153.58 and the 50-day SMA. Note that the 20 SMA in the weekly chart is also hovering within this territory.
Given the positive momentum in the RSI, the Stochastics, and the MACD, the base scenario is for the pair to continue its recovery above the two-month low of 148.96. That said, as long as the RSI keeps hovering below its 50 neutral mark and the MACD is fluctuating within the negative zone, some caution is still required.
If selling pressures resurface, pressing the price below 151.14, the descending trendline could immediately catch the fall around the 150.00 level. Should it give way, however, the two-month low of 148.96 could come into view again. A clear break below that floor, and more importantly, a clear step beneath July’s low of 148.45, would downgrade the medium-term outlook from neutral to bearish, likely bringing February’s support of 147.38 next under examination.
In brief, GBPJPY bulls are expected to dominate in the near term, likely stretching the recent upside correction towards the 152.49 – 152.75 region.
