GBPJPY gained extra positive momentum on Wednesday to peak at a five-month high of 167.96 and near the upper boundary of a bullish channel.
The price was trading slightly weaker during Thursday’s European trading hours, increasing speculation that a new bearish wave may soon start within the channel as the RSI and the Stochastic oscillator seem to be losing impetus near their overbought levels.
Sellers, however, may not dominate unless the price eases back below the former nearby resistance of 166.75, which coincides with the 61.8% Fibonacci retracement of the 172.10-155.34 downleg. A decisive close lower could find immediate support around the 20-day exponential moving average (EMA) at 165.00, while slightly lower, the 50-day EMA at 163.72 could be on guard to prevent further declines towards the 200-day EMA and the channel’s lower boundary seen at 161.75. If the latter gives way too, the next stop could be somewhere between the broken resistance trendline from October’s 2022 peak at 160.40 and the 23.6% Fibonacci level of 159.30.
In the positive scenario, where the pair pushes above the channel and beyond 169.00, the spotlight will turn to October’s 2022 high of 172.10. A continuation higher may last till the 2016 top of 175.00.
Summing up, GBPJPY is looking cautiously bullish in the short-term picture. While overbought signals hint at a downside reversal, the price could still power higher if the 166.75 area provides a strong footing under the price.