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GBP/JPY Price Outlook: Failed at Resistance Now Eyes Support

GBP/JPY Price Outlook: Failed at Resistance Now Eyes Support

2020-05-13 14:00:00
Mahmoud Alkudsi, Analyst
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GBP/JPY Technical Forecast

GBP/JPY- Bears in Charge

On Wednesday, GBP/JPY printed 130.66- its lowest level in six weeks. Later on, the price rallied and settled above 131.00 as some bears seemed to cover. Yet, on Friday the market closed the weekly candlestick with a near 1.0 % loss.

This week, the Relative Strength Index (RSI) has remained below 50, indicating that bearish momentum was still intact.

GBP/JPY Daily PRice CHART (AUG 1, 2018 – May 13, 2020) Zoomed Out

GBPJPY daily price chart 13-05-20 zoomed out
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GBP/JPY Daily PRice CHART (MARCH 17 – MAY 13, 2020) Zoomed In

GBPJPY daily price chart 13-05-20 zoomed in

Based on analysis of the daily chart, on April 14 GBP/JPY corrected its uptrend move then started a sideways move creating lower highs with higher lows. On Monday, the price closed below the 50-day moving average providing a bearish signal. On the following day, the market reversed lower eyeing a test of the low end of the current trading zone 128.84 -133.30.

A close below the low end of the aforementioned zone may encourage bears to press towards 125.50. A further close below that level could send the GBPJPY even lower towards 122.62. That said, the weekly support area and levels marked on the chart (zoomed in) should be considered.

On the flip-side, a close above the high end of the zone would mean weaker bearish sentiment and may cause a rally towards 137.83. A further close above that level could extend this rally towards 143.20. In that scenario, the weekly resistance levels underlined on the chart should be kept in focus.

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GBP/JPY Four Hour PRice CHART (April 29 – MAy 13, 2020)

GBPJPY four hour price chart 13-05-20

Looking at a four-hour chart, on Friday GBP/JPY broke above the neckline of the double bottom pattern located at 132.02 then rallied towards 131.19. This week, the price has respected the downtrend line originated from the April 30 high at 135.45, highlighting the bearish outlook of the market.

A break below 130.65 could trigger a selloff towards 129.63. Nonetheless, the weekly support level underscored on the chart should be watched closely. In turn, a break in the other direction i.e. above 134.20 may cause a rally towards 135.50. Although, the weekly resistance level printed on the chart should be monitored.

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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.

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