GBPJPY maintains a bullish market structure defined by the uptrend from the April 17 low of 135.58 to the May 10 high of 148.09. This was the highest level since December 15.
The market turned lower after becoming over-extended, as indicated by the RSI which reached well into overbought levels above 70 in early May.
Support was found at 143.34, which is the 38.2% Fibonacci retracement level of the upleg from 135.58 to 148.09. From here, prices rebounded on Thursday as there was a slight uptick in upside momentum, with RSI bouncing off the 50 level, which separates bullish from bearish territory.
Important resistance lies at 145.70. This was a previous support level that was tested several times recently. It is also where the current tenkan-sen line is located. Clearing this resistance level would open the way towards the key 147 level before re-testing the 148.09 high. From this point, there would be a resumption of the uptrend that started from 135.58.
Alternatively, if current upside momentum fades and prices fall through support at 143.34, this could accelerate a decline towards the 50% Fibonacci at 141.83. Below this the 61.8 Fibonacci at 140.34 would be the next support. A drop below this would erase the medium-term bullish bias.
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