GBP/JPY stretched its sharp sell-off towards a fresh five-month low of 132.31 on Thursday and into a key support zone as the risk-off sentiment sharpened, with the pair further deviating below the 200-day simple moving average (SMA).
Upside corrections or some consolidation cannot be ruled out in the near-term as the fast-Stochastics head north at a time when the RSI is hovering below its 30 oversold mark.
Technically speaking, this implies that the nearby key 132.50-131.94 support region formed by the January 2019 low and the 23.6% Fibonacci of the downleg from 149.47 to 126.53 should curb any decisive attempt lower. Otherwise, the bears could pick up steam towards the next barrier around 130.40, while below that, another downfall could take place until 128.15.
Meanwhile, the bearish cross between the 20- and 50-day SMAs provides little optimism for a trend reversal.
In the positive scenario, if the market manages to close above 135.80, the spotlight will shift to the 138.00-138.80 area where the 200-day SMA and the 50% Fibonacci are positioned. Climbing higher, the 61.8% Fibonacci of 140.70 could be the next target.
Looking at the medium-term picture, the negative outlook turned stronger as the price further extended below 138.80.
Summarizing, GBPJPY could see some recovery or enter a consolidation phase if the 132.50-131.94 area rejects additional downside movements. In the medium-term, the sentiment is likely to remain bearish unless a rebound above 138.80 occurs.
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