- Gentle downward move continues ahead of key events
- GBPJPY ready to test a key area as intervention rumours linger
- Momentum indicators appear to have reset after the strong rally
GBPJPY is trading higher today as the market is preparing for next week’s events. The bears are trying to stage a pullback, but such a move could only gather pace if the momentum indicators decide to send strong bearish signals.
However, only the stochastic oscillator has been supportive of the current muted move, but even this indicator appears to have stabilized a tad above its oversold threshold. On the flip side, the Average Directional Movement Index (ADX) remains indifferent to the current downleg as it remains below its 25-threshold; thus signaling a range-trading market. Similarly, the RSI continues to hover around its 50-midpoint, confirming the current indecisiveness of market participants.
Should the bears remain confident, they would try to break the busy 181.42-183.10 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 a go at testing the support set by the 100-day SMA at 179.41, before having a go at the more important 174.50-174.84 range.
On the other hand, the bulls are probably taking a breather but closely monitoring the current correction. They are keen on keeping GBPJPY above the 181.42 level and gradually stage a move towards the February 26, 2015 high at 185.02. They could then have the chance of making a new 2023 high, before setting sail for the December 5, 2014 high at 189.70.
To sum up, GBPJPY bears are trying to recover part of their significant losses, but they need the support from the mixed momentum indicators for the current pullback to snowball.