GBP/JPY Signals Bearish Outlook
This week, GBP/JPY started with a bearish gap that pushed price below 170.00, tagging 169.50 and a key support area going back to May and April as we can see in the daily chart. We can also see that price broke below the 200-day simple moving average (SMA).
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The bearish attempt opened up the 167.77 support and low from March as well as the 163.87 February and 2014 low. However, price action today shows a resilient GBP/JPY as it rallied back above the 200-day SMA and is around the 172.00 handle as we get into the 9/9 US session.
Testing Key Resistance:
When we look at the 4H chart. we can see that after the week started with a gap down, price has come back to not only fill the gap but extend higher. Now price is testing a converged cluster of 200-, 100-, and 50-period SMAs. Also note that the 61.8% retracement level is around 172.20. One last thing, the 4H RSI is just around 60, and it does not retreat, the bearish momentum from last week will be lost.
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As I complete this post, the GBP/JPY is pushing above the aforementioned resistance factors. Note in the 4H chart a strong tail that pushed price from 171.25 to 172. Now, this tail represents strength for the short-term so if price falls below 171.20, we might lose the currently brewing bullish outlook, and GBP/JPY would be back to neutral.
Now if price can clear above 173.00 as the next step, GBP/JPY would be above the 100-, and 50- day SMAs as well. This would bring up the bullish continuation scenario. At this point GBP/JPY is simply at the crossroad as it trades between the cluster of daily SMAs. We should probably stay away and see how GBP/JPY settles after a few more of these swings.
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