GBP/JPY Price Analysis: Double Top bolsters a bearish reversal, 164.00 eyed

The GBP/JPY pair has given a downside break of its consolidation formed in a 167.90-168.07 range in the late New York session. Earlier, the asset witnessed a steep fall after failing to refresh its six-year high, which is placed at 168.73.

A formation of a Double Top chart pattern after a prolonged rally on an hourly scale indicates exhaustion in the uptrend. This also advocates a bearish reversal but a reversal seeks more downside filters. The asset experienced a sell-off while attempting to overstep the six-year high at 168.73. It seems a weak attempt by the pound bulls is responsible for the loss of momentum in the upside rally.

The cross has violated the 20-period Exponential Moving Average (EMA) at 167.81 and is eyeing an imbalance move below the 50-EMA at 167.50.

The Relative Strength Index (RSI) (14) displayed a sheer downside move while shifting its range below 60.00-80.00. Also, the momentum oscillator has sensed barricades around 60.00, which signals that the market participants are not bullish on the cross anymore.

A firmer drop below Thursday’s low at 166.69 will trigger the Double Top formation and activate the yen bulls for a downside move towards Monday’s high at 165.67. Breach of the latter will drag the cross towards the round-level support at 164.00.

Alternatively, pound bulls could regain control if the cross oversteps a six-year high at 167.83. This will drive the asset towards the 8 February 2016 high at 170.63, followed by a 13 April 2015 low at 174.88.

GBP/JPY hourly chart