GBP/JPY traded lower today, breaking below the lower end of the upside support line that’s been containing the price action since Jan. 21. Although the rate is still above the 155.15 support, the downside exit out of the upside channel suggests that further declines may be possible.
We believe that the bears may soon challenge the 155.15 zone, the break of which could extend the fall towards the 154.45 barrier, marked by the low of Jan. 31. If they are not willing to stop there either, we could see them pushing towards the low of Jan. 27, at 153.85.
Shifting attention to our short-term oscillators, we see that the RSI lies below 50 and points down, while the MACD, already below its trigger line, has just touched its toe below zero. Both indicators detect negative momentum and increase the chances of further declines in this exchange rate.
On the upside, we would like to see a clear rebound back above 156.85 before we start examining whether the bulls have regained the upper hand. This may confirm the rate’s return within the aforementioned upside channel and pave the way towards the 157.75 barrier, marked by Friday’s high, or the 158.06 zone, marked by the peak of the day before.
