GBP/JPY is in a bearish continuation attempt. The 4H chart shows a recent consolidation and bullish correction that eventually ended with the revival of the prevailing bearish mode.
The 4H chart shows that there was a bullish breakout in March that stalled at 179.30. After this brief bullish “clear-out” action, strong bearish candles started to appear in the 4H chart. This lead to a break down of the Feb-March consolidation and price made a new low to start this week at 175.27.
There might be some bullish correction in the near-term, but a bearish market should not climb back above 178. There should be resistance around 177, and the RSI should not climb back above 60 if the bearish momentum is here to stay.
The daily chart shows that indeed the market seems to be shifting from a bullish mode at the end of 2014 to a neutral-bearish mode in 2015. Price is under the 200-, 100-, and 50-day SMAs. The RSI tagged 30, but was not able to tag 70.
Now with GBP/JPY trying to make new lows on the year, it is poised to open up the 168 low from Oct. 2014. The bearish candles during the 4/9 and 4/10 sessions were strong and are further evidence of the bearish continuation scenario.
Now, this bearish outlook is strong for the medium-term, but it is in the context of a bullish mode in the long-term as we can see in the weekly chart.
The weekly chart shows that price has been bullish since a low of 116.76 om 2012 until the high at the end of 2014 at 189.71. The current decline could simply be an ABC correction to the 170 area, after which we should expect the pressure to return towards the 189.71 high.
It will take a break below 168 to introduce the price top scenario.
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