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GBP/JPY - Can it Maintain New the Bullish Attempt?

GBP/JPY had a violent downswing from late September to mid-October, falling from the high on the year at 180.70 down to 168. It has since started to recover, and has the potential to revive the bullish trend before that latest downswing.

Now, price has been making higher highs and lows but the rally looks vulnerable as it is held below the 200-period SMA in the 4H chart. It is also testing a rising trendline from mid-October.

GBP/JPY 4H Chart 10/29(click to enlarge)

A break below 174.00 might give the current rally trouble. It would clear below the rising speedline. A stronger bearish continuation signal would be a dip below 172.50 in which case price would also break back below the cluster of 200-, 100-, and 50-period simple moving averages. This would at least revive the 168-169 lows as a target.

When we look at the 1H chart, we can see price in a flag pattern. The RSI has tagged above 70 and is still holding above 40, so in the near-term, the technical outlook is still bearish. A break below 174 with the RSI falling below 40 might shift the bullish outlook to a neutral one, with a break below 173 to start opening up the bearish outlook. then if price starts to hold below 173.50, our bearish outlook would strengthen. However, a break above 174.75 will suggest continuing recovery in the GBP/JPY. The 175.85 (61.8% retracement) level up to 176 could be the very short-term target.

GBP/JPY 1H Chart 10/29(click to enlarge)