GBP/JPY Eyes a Test of Weekly Support, GBP vs JPY Price Forecast
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GBP/JPY Technical Analysis
GBP/JPY- Hesitant Bears
On Tuesday, GBP/JPY declined to a near four week low at 131.91 then rallied after, as some bears seemed to cover. Yet, on Friday the market closed the weekly candlestick with a 1.1% loss.
Alongside that, the Relative Strength Index (RSI) remained flat below 50, highlighting paused bearish momentum.
GBP/JPY Daily PRice CHART (JUNe 21, 2018 – April29, 2020) Zoomed Out
GBP/JPY Daily PRice CHART (FEB 23 – April 29, 2020) Zoomed In
From the daily chart, I noticed that on April 9 GBP/JPY rallied to its highest level in a near five weeks. The price U-turned after, signalling a weaker bullish sentiment. On April 21, GBP/JPY declined to the current trading zone 128.84 -133.30.
The market failed on multiple occasions to return to the higher zone. Therefore, GBPJPY may fall towards the low end of the aforementioned trading zone. A further close below that level could send the price even lower towards 125.50. In that scenario, the weekly support levels underlined on the chart (zoomed in) should be considered.
On the other hand, a close above the high end reflects bears hesitation. This could start a rally towards the 137.83. A further close above that level may extend this rally towards 143.20. That being said, the daily and weekly resistance levels marked on the chart would be worth monitoring.
GBP/JPY Four Hour PRice CHART (April 2 – April 29, 2020)
Looking at a four-hour chart, I noticed that on April 21 GBP/JPY broke below the uptrend line originated from the April 3 low at 132.54. Later on, the price developed a symmetrical triangle.Today, the price broke below the lower line of this pattern generating a bearish signal.
A break below 130.84 could resume bearish price action towards 129.65. Yet, the weekly support level underscored on the chart should be kept in focus. In turn, a break in the other direction i.e. above 134.20 may cause a rally towards 134.92. Nevertheless, the daily resistance level printed on the chart should be watched closely.
Written By: Mahmoud Alkudsi,Market analyst
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.