GBP/JPY Bearish Momentum Fades as Support Levels Hold
GBP/JPY Price Outlook, Charts and Analysis
- GBP looking ahead to Bank of England Governor Carney’s speech tomorrow.
- GBP/JPY bearish momentum nearing its end
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GBP/JPY – Bearish Momentum Losing Steam
On May 31, bearish momentum sent GBP/JPY to trade in a lower multi - day trading range (136.40 – 137.84). The pair also broke below the Jan 15 low at 137.37 but failed to reach the lower end of the mentioned range. The monthly candlestick closed with 5.8% loss at 136.79.
The bearish momentum showed previously signs of weakness, and returned at the start of June indicating more weakness. The pair closed on June 3 with a doji pattern, alongside the relative strength index (RSI) rose from 19 to 27 indicating a clear intention to abandon the oversold territory.
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GBP/JPY DAILY PRICE CHART (FEB 4, 2019 – JUN 5, 2019)
Looking at the GBP/JPY daily chart we notice the price is heading to test the higher end of the current trading range mentioned above. Any close above 137.84 might send the price higher towards 139.00. The weekly resistance at 138.40 and 61.8% Fibonacci retracement at 138.67 need to be in focus.
Further bullish movement would be contingent on trading above 139.00. If GBP/JPY closes above it will likely move to the higher trading range (139.00- 140.50) with an increased likelihood to see the higher end of the range.
In turn, a close below 136.40 could mean more bearishness towards 135.53. The weekly support at 136.00 should be watched closely. If GBP/JPY closes below 135.53 it could open the way towards 133.35. However, the weekly supports at 134.92 and 134.20 are worth monitoring.
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GBP/JPY Four-HOUR PRICE CHART (MAY 13- 5 JUN, 2019)
Looking at the four-hour chart, yesterday GBP/JPY printed 136.55 its lowest price in 5 months. In turn, the pair traded above 137.12 after rebounding on Monday. Today, the price rallied nearing 137.84. Therefore, any failure in this rally and a break below yesterday’s high 137.12 would open the door for the bears to try to retest 136.55. A break below 136.40 may lead GBP/JPY towards the weekly support mentioned above at 136.00.
On the other hand, a rally above the weekly resistance at 138.40 could send the price higher towards 139.00. The resistance zone at 138.67 61.8% Fib and the May 30 high 138.74 need to be in focus.
Written By: Mahmoud Alkudsi
Please feel free to contact me on Twitter: @Malkudsi
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.