GBPJPY inched lower to seek support near the 20-day simple moving average (SMA) early on Friday after getting rejected again around June’s descending trendline, which looks to be part of a symmetrical triangle.
The symmetrical triangle formation is considered a neutral trend signal. Therefore, traders may adopt a wait and see approach as the price is near to complete the pattern and the momentum indicators provide a mixture of signals; the RSI is sliding towards its 50 neutral mark, the MACD is stabilizing marginally above its zero and signal lines, whereas the stochastics are changing direction to the downside.
If the price brings the bulls back into play above the triangle and the 166.00 – 166.38 region, all eyes will turn to the ceiling of 167.80 – 168.70. A decisive move higher from here could chart a new peak around 170.50, where the pair faced some limitations at the start of 2016.
Alternatively, a close below the triangle’s lower boundary seen at 163.93 is expected to shift the balance in the favor of the bears, likely prompting a sharp decline towards the 38.2% Fibonacci retracement of the 150.96-168.70 upleg at 161.95. A step beneath that base may create additional losses towards the 50% Fibonacci of 159.86, unless the tentative support trendline drawn from 150.96 comes to the rescue around 160.70. The 200-day SMA could be the next destination at 158.00 if downside pressure further intensifies.
Summarizing, GBPJPY is expected to exhibit a neutral performance in the coming sessions, with traders waiting for a close above or below the triangle to navigate the market accordingly.
