GBPJPY is trading sideways today as the recent strong bullish pressure appears to have abated somewhat. A short-term bearish trend channel has formed as the bears are preparing to test the support set by the busy 180.81-183.09 region, hoping that any pullback achieved might not prove short-lived like the late-July 2023 price action.
The bears would clearly enjoy some supportive messages from the momentum indicators. However, only the stochastic oscillator appears to be favouring their intentions. It has managed to fall below its moving average (MA) and it is heading towards its oversold territory. On the other hand, the Average Directional Movement Index (ADX) remains uninterested in the current downleg as it has just dived below its 25-threshold, and thus signaling a range-trading market. Similarly, the RSI is trading almost at its 50-midpoint, revealing a degree of hesitation from market participants.
Should the bears feel confident, they would try to break the busy 180.81-183.09 range populated by the June 22, 2023 high, the April 9, 2001 high and the 50-day simple moving average (SMA). They could then have the chance of testing the 100-day SMA at 178.62 before setting their eyes on the more important 174.50-174.84 range.
On the flip side, the bulls are probably taking a breather and treating the current move as a short-term correction. They are keen on keeping GBPJPY above the 180.81 level and gradually stage a move towards the February 26, 2015 high at 185.02. They could then have a go at making a new 2023 high.
To sum up, despite the mixed momentum indicators, the GBPJPY bears are trying to recover part of their significant losses, potentially aiming for a break below the 180.81 level.
