GBP/JPY Price Analysis: Struggles around 162.00 as a bearish-engulfing candle pattern looms
- The British pound gave back Monday’s gains amid a risk-on market sentiment.
- A positive market mood failed to underpin the GBP/JPY cross currency.
- GBP/JPY Price Forecast: Upwards, but a bearish engulfing candlestick pattern looms.
GBP/JPY erases Monday’s 300 plus pip rally gains and is set to form a bearish engulfing candlestick pattern, which means that the pair is about to be under downward pressure. However, a daily close below 160.87 is needed to confirm its validity. At the time of writing, the GBP/JPY is trading at 161.01.
The market mood has improved since the mid-European session, as European and US equity indices reflect. Discussions between Russia and Ukraine seem to progress. Latest developments in Eastern Europe suggest that a Putin – Zelenskiy meeting would likely happen, as Ukrainian presidential advisor Podolyak said, according to a CNN reporter via Twitter.
Overnight, the GBP/JPY clung to the 50-hour simple moving average (SMA), followed by a slump during the European session, which carried on to the North American one, witnessing a daily low at 160.25.
GBP/JPY Price Forecast: Technical outlook
The GBP/JPY retreated below 161.00, but the bias remains upward. Nevertheless, if the GBP/JPY records a daily close below 160.87, it would form a bearish engulfing candlestick pattern, suggesting that downward pressure is mounting on the GBP/JPY.
If that scenario plays out, the GBP/JPY first support would be 160.00. Once cleared, the next demand zone would be March 23 daily low at 159.03, followed by 158.00.
Otherwise, the GBP/JPY first resistance would be 162.00. Breach of the latter would expose March 29 daily high at 162.71, followed by 163.00 and then 164.00.
Technical levels to watch
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.
