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GBP/JPY Makes a Sharp Pullback

GBP/JPY started the week on a bearish note, breaking below the 200-day simple moving average (SMA). However, GBP/JPY found resistance at 169.50 and bounced up from the support pivot here going back to April and May. Today (9/9), price climbed back above the 200-day SMA. The daily RSI held above 40, showing failure to establish bearish momentum, suggesting the market is in still in consolidation in the daily chart.

(GBP/JPY Daily Chart 9/9)

Looking at the 4H chart, we see a market that is threatening a key resistance cluster in the 172-172.20 area. This area contains a completely converged cluster of 200-, 100-, and 50-hour SMAs as well at the 61.8% retracement of last week's decline into this week's open. A break above 172.20 shelves the bearish outlook provided by the break below the 200-day SMA.

(GBP/JPY 4H Chart 9/9)

GBP/JPY is basically back at the crossroads. A break above 173 might revive a bullish outlook as it would put price above the 100-, and 50-day SMAs. We might need a few more swings before we can get a better picture. For now, price action is showing a resilient GBP/JPY, invalidating a the bearish signal from the start of the week.