GBP/JPY is an example of dramatic shifts that can happen in the currency markets. In the matter of a month, it has turned from a sharply bullish outlook to a possible capitulation.
After a breakout rally in September to set a high on the year at 180.70, price has essentially reversed the entire rally. The latest soft UK inflation data helped GBP/JPY accelerate the decline and it is now threatening a price top. However, this price top is likely going to take a while to develop because September’s rally is already reversed and the daily RSI is near oversold condition. If price holds below the 174-175.40 area then the price top scenario would grew stronger.
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