GBP/JPY Price Analysis: Monday’s 300 pips plunge paves the way toward 164.00
- Deteriorated market sentiment, weighed on the Pound Sterling, bolstered the Japanese Yen.
- GBP/JPY’s failure to hold around 168.00 exacerbated a fall to 165.00.
The Pound Sterling (GBP) extends its losses against the Japanese Yen (JPY) amid a risk-off impulse as traders get to the sidelines ahead of the Federal Reserve (Fed) Chairman Jerome Powell’s speech on Wednesday. In the FX space, risk-perceived currencies like the GBP were defensive against the safe-haven status of the JPY. At the time of writing, the GBP/JPY is trading at 165.71.
GBP/JPY Price Analysis: Technical outlook
From a daily chart perspective, the GBP/JPY plummeted 300 pips on Monday towards the 165.00 region, but the pair attempted to trim some of its losses. Albeit the GBP/JPY printed a daily high of 166.67, the cross dived to fresh weekly lows at 165.52. Even though the cross’s path of least resistance in the near term is downwards, the GBP/JPY will face solid support levels at the 50 and 100-day Exponential Moving Averages (EMAs) at 165.34 and 164.27, respectively. Once those two support levels are broken, that could pave the way to test November’s low at 163.03.
The GBP/JPY 4-hour chart portrays the pair in a downtrend, trading within the boundaries of a descending channel, with a 150 pip width. And due to the proximity of GBP/JPY’s price action to the channel’s top trendline, a correction downwards is suggested. Further cementing the case is the Exponential Moving Averages (EMAs) above the spot price, with a bearish slope, alongside the Relative Strength Index (RSI) at bearish territory.
Therefore, the GBP/JPY first support would be the S1 daily pivot at 165.21. Break below will expose the 165.00 psychological level, followed by the S2 pivot at 164.83, ahead of the bottom-trendline of the descending channel at 164.00.
GBP/JPY Key Technical Levels
Author
Christian Borjon Valencia
FXStreet
Christian Borjon began his career as a retail trader in 2010, mainly focused on technical analysis and strategies around it. He started as a swing trader, as he used to work in another industry unrelated to the financial markets.
