GBP/JPY Price- Technical Outlook
GBP/JPY Price – Weaker Bullish Sentimnet
Last week, GBP/JPY hit an over three-week high of 135.92 without committing to a new bull trend. Ultimately, the pair retreated and closed the weekly candlestick modestly in the green with nearly a 0.5% gain. Alongside that, the Relative Strength Index (RSI) fell from 57 to 52 and reflected that bulls were losing steam.
Meanwhile, British pound rallied over last week’s government plan to revive the UK economy nonetheless, the uncertainty of the EU/UK talks kept the lid on any further positive move of the pair.
GBP/JPY Daily PRice CHART ( July 8, 2018 – JuLY 15, 2020) Zoomed Out
GBP/JPY Daily PRice CHART (March 26 – JUly 15, 2020) Zoomed In
In early July, GBP/JPY broke above the neckline of the double bottom pattern located at the 134.00 handle indicating a shift in favour bull’s control. The market rallied to the high end of the current trading zone 133.30 – 135.81, yet failed to break above it. The pair rebounded yesterday from the aforementioned neckline and highlighted that bullish momentum was still intact.
A close above the high end of the zone may open up a rally towards 137.83 which is an approximate 200 pips extension above the current range, and any further close above that may extend the rally towards the 141.00 handle- a psychologically significant level.
On the flip-side, a close below the low end of the zone may ultimately lead GBPJPY’s fall towards its lowest level since late May at 130.84, and any further close below that level may encourage bears to revisit 128.84.
GBP/JPY Four Hour PRice CHART (May 22 – JuLY 15, 2020)
On Friday, GBP/JPY traded below the first upward trendline support originating with the July 1 low at 132.94, signaling a weaker bullish sentiment, and thus far held below that line.
A break below the second upward trendline support originating with the aforementioned low would generate another bearish signal.
To conclude, a break below 134.41 could send GBPJPY towards 133.55, while a break above 136.29 may cause a rally towards 137.20. As such, the daily support and resistance levels underlined on the four-hour chart should be watched closely.
Written By: Mahmoud Alkudsi,Market analyst
Please feel free to contact me on Twitter: @Malkudsi
