GBPJPY turned red after its one-week-old 3.2% rally reached an 8-year high of 186.45 near a trendline area. The longer-term ascending line from May 2021 and the shorter-term upward-sloping trendline from October 2022 cemented that ceiling, sending the price slightly lower on Thursday.
The pair continued to weaken during Friday’s early European trading hours, heading towards the former resistance of 184.00. The 20- and 50-day simple moving averages (SMAs) could also come to the rescue slightly lower. If the SMAs allow more declines below 182.00, sellers could drive towards the channel’s lower boundary seen near 180.00. The 178.00 constraining zone could next come into consideration, as a step lower from there would switch the short-term outlook to bearish.
Technically, the pullback in the momentum indicators is endorsing the current negative mode in the market. That said, the RSI is still clearly above its 50 neutral mark, while the stochastic oscillator has not exited the overbought zone yet, suggesting that an upside reversal cannot be excluded. Note that the MACD is also standing above its red signal line.
If the market finds enough buyers to crawl above the trendline area of 186.70, the price could advance towards the 190.00 psychological level or slightly higher to test the channel’s upper boundary around 191.50. A decisive close above the bullish formation could lift the price straight up to the 2015 top of 195.55-195.87.
In brief, GBPJPY came under pressure before reaching the upper band of a bullish channel, increasing the risk for more downside corrections in the coming sessions.