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GBP/JPY Outlook: GBP vs JPY Price – May Rally Further As Support Holds

GBP/JPY Outlook: GBP vs JPY Price – May Rally Further As Support Holds

Mahmoud Alkudsi, Analyst
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GBP/JPY Price- Technical Forecast

  • Bulls eased up, although remained in charge
  • Bullish signals on the GBP vs JPY price chart

GBP/JPY Price – Stalled Uptrend Momentum

Last week, GBP/JPY hit a near two-week low at 133.98 without committing to a new bear trend. Ultimately, the pair closed the weekly candlestick modestly in the red with nearly a 0.3% loss.

Alongside that, the Relative Strength Index (RSI) remained flat above 50 highlighting a paused bullish momentum.

GBP/JPY Daily PRice CHART ( July 8, 2018 – JuLY 22, 2020) Zoomed Out

GBPJPY daily price chart 22-07-20 zoomed out
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GBP/JPY Daily PRice CHART (March 26 – JUly 22, 2020) Zoomed In

GBPJPY daily price chart 22-07-20 zoomed in

On July 14, GBP/JPY rebounded from the neckline of the Double Top pattern located at 134.00 indicating that bullish sentiment was still in place. As a result, the pair climbed to the current trading zone 135.81 – 137.83.

A close below the low end of the current trading zone signals a weaker bullish bias and may ultimately guide GBP/JPY’s fall towards the weekly support level at 133.30. A further close below that level could embolden bears to revisit the monthly support level at 130.84.

On the other hand, another close above the low end of the current trading zone could start a rally towards the high end of it, and a further close above that may encourage bulls to extend the rally towards the 141.00 mark the 141.00 handle- a psychologically significant level.

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GBP/JPY Four Hour PRice CHART (May 22 – JuLY 22, 2020)

GBPJPY four hour price chart 22-07-20

At the start of this week, GBP/JPY broke above the downward trendline resistance originating from the July 13 high at 135.48 and generated a signal in favor of the bulls to control.

That said, a break below the upward trendline support originating from the July 1 low at 132.94 may keep the bearish potential alive.

To conclude, a break above 136.63 may cause a rally towards the high end of the current trading zone discussed on the daily chart at 137.83, while a break below 134.94 could send GBPJPY towards the 134.00 handle. As such, the daily support and resistance levels marked on the four-hour chart should be kept in focus.

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.