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Hugo in HTO Trading,

GBPJPY: Strong bounce from 2016 low

Since the beginning of the year the currency lost more than 20.0% although last week rose more than 3.0% and is in a potential phase change, shifting from a recovery to an accumulation phase.

Last week the GBPJPY rallied with a wide range breaking above weekly resistance, now support and closed near the high of the week, in addition managed to close above the previous week high, which suggests a strong bullish momentum.

The stochastic is showing an overbought market however is still displaying a strong bullish momentum.

Expecting an upward move to a Fibonacci retracement at 148.95 on a break above the previous week high at 141.74 (scenario 1) although a bounce from a Fibonacci retracement at 148.95 may drag down currency pair to a weekly support at 140.02 (scenario 2).