GBPJPY holds muted tone after hitting key resistance
Outlook neutral within the 179.00-183.20 region
GBPJPY has been steadily declining since its peak at 186.45, hitting a low of 178.00 earlier this month before rising back above 180.00.
The resistance trendline from August’s peak came to cancel last week’s bullish action at 183.80, with the technical indicators currently raising doubts as to whether the pair will find enough buyers to rotate higher again. The RSI is not making much progress around 50, and the stochastic oscillator is still going down. The MACD provides little hope for a rebound as well, as it’s losing steam despite fluctuating above its red signal line in the negative area.
In trend signals, the bearish cross within 20- and 50-day simple moving averages (SMAs) is clouding the short-term picture.
The base scenario is for sellers to stay on the sidelines until the price closes below the 179.00-180.00 support region, where the 23.6% Fibonacci retracement of the previous uptrend and two key constraining lines are positioned. If that bearish case unfolds, the price could seek shelter somewhere between the 38.2% Fibonacci level of 175.85 and the former barrier of 174.50 last seen in June. The 200-day simple moving average (SMA) and the 50% Fibonacci could next buffer downside forces near 172.50. A break below that floor would neutralize the medium-term picture, likely causing a freefall towards the 61.8% Fibonacci of 169.13.
Otherwise, the bulls could again fight the nearby resistance trendline and the 50-day SMA at 183.20. A victory there could see an exponential increase towards the eight-year high of 186.45 or slightly higher to 187.75. Yet, what could create new buying is a durable extension above the October 2022 ascending line at 189.60.
In short, GBPJPY is holding a neutral profile, trading below a resistance trendline at 183.20 and above the key support area of 179.00-180.00. A violation of one of those borders could direct the market accordingly.
