GBPJPY has been on a steady forex trend higher and may be due to resume its climb, as a bullish divergence has formed on its 1-hour time frame. Stochastic made lower lows while price made higher lows, with the oscillator already starting to move out of the oversold zone.
This indicates that the upward forex trend momentum could push price back to the previous highs near the 180.00 major psychological resistance eventually. Price has to break above the current consolidation pattern at the 38.2% Fibonacci level before confirming the return of buying pressure.
Forex Trend Forecasts
MACD is also hinting at possible pickup in forex trend price action, as GBPJPY resumes its ascent. Strong momentum could even lead to the formation of new highs beyond 180.00.
However, a deeper forex trend pullback to the Fib levels and trend line is still possible, as price could also find support near the 100 and 200 simple moving averages. This lines up with the 61.8% Fibonacci retracement level, which is in line with the 176.00 major psychological support. The 100 and 200 simple moving averages could also act as dynamic support for price action.
Take note that the shorter-term SMA is still moving above the longer-term SMA, which confirms that the forex trend higher is still intact. A break below these support zones could be a signal that a reversal is in the cards though and that GBPJPY might be in for more losses later on.
There isn’t much in the way of economic data for the UK this week, although the recent results of the Scottish referendum could keep the pound supported. As for Japan, Economy Minister Amari recently mentioned that another set of tax hikes could be implemented and this might keep the Japanese economy weak for the time being. Inflation reports are due from Japan on Friday and weak data could keep GBPJPY in an upward forex trend.
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