GBPJPY has been stuck in an upward sloping channel since early April, generating a structure of higher highs and creating a fresh 7½-year peak of 174.26 last Tuesday. Even though the pair experienced a minor correction after that, it quickly stormed back higher to challenge its recent multi-year high.
The short-term oscillators currently suggest that bullish forces retain the upper hand. Specifically, the RSI has flatlined slightly below its 70-overbought zone, while the MACD histogram is holding above both zero and its red signal line.
Should buying pressures intensify, the 7½-year high of 174.26 could be the first barricade for the bulls to clear. Slicing through that wall, the pair could ascend towards levels not seen in years, where the April 2015 peak of 175.00 could curb any upside attempts. If that barrier fails, the bulls might then attack the March 2015 low of 176.47.
Alternatively, if the positive momentum wanes and the price reverses lower, the recent support of 172.51 could act as the first line of defence. Further declines could then cease at 171.20 before the December resistance of 169.26 comes under examination. A dive beneath that zone could trigger a decline towards the 167.82 support.
In brief, GBPJPY has adopted a bullish short-term pattern, posting consecutive multi-year highs in the past two weeks. However, a downside correction should not be ruled out as the price has approached overbought conditions.
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