GBP/JPY bears take charge, eyes on 50-SMA [Video]
|GBPJPY sharpened its downturn below the 20-day simple moving average (SMA) and a key support trendline on Friday, tumbling to a two-week low of 163.24.
The price is also set for a close below the 23.6% Fibonacci retracement of the 150.96 – 168.70 upleg at 164.53, which was indestructible over the past week, hinting at further weakness ahead. The momentum indicators are in favor of this bearish scenario, too. The RSI is crossing below its 50 neutral mark, the Stochastics are falling, and the MACD is losing steam below its red signal line. Besides, with the price trading some distance above the lower Bollinger band, the market has yet to reach oversold levels.
Sliding even lower, the pair may face congestion around the 50-day SMA and the tentative support trendline drawn from the 155.58 trough at 162.70. The 38.2% Fibonacci of 161.95 is adding more importance to the region. Hence, a move below that base is expected to produce another strong downfall, likely towards the 50% Fibonacci of 159.86 and the longer-term ascending trendline.
On the upside, a bounce back above the 20-day SMA at 165.35 is required to bring the 167.00 round level and the short tentative resistance trendline under examination. Then, the bulls may attempt to clear the tough ceiling of 167.70 – 168.70 with scope to meet the 170.50 barrier taken from January-February 2016.
In brief, downside pressures are expected to persist in the near term, with traders likely seeking immediate support within the 162.70 – 162.95 territory.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.