Forex Technical Update
The 1H GBP/JPY chart is showing us some bearish signals. 1) The market broke below the 200 period simple moving average 2) a rally tested the 200 SMA near 119.00 and for the most part respected the moving average as well as respecting what appears to be a double top. 4) The RSI already tagged 30, and failed to sustain a break above 60 - decline below 40 suggests maintenance of bearish momentum.
The price action relative to the moving average is a sling shot and a confirmation of the bearish intent. There is some support at the 118.06 (78.6% retracement) level. A strong break below this level should bring about a bearish continuation. In the 4H chart, we see that the bearish scenario first has a test of the 116.85 low (maybe conservatively, 117.00). Note that the 4H RSI is also held below 60 after tagging below 30. A return below 40 here would also reflect the bearish continuation scenario panning out.
If the market fails to break the very short-term low at 117.78, and then pushes back above 119.10, we might be developing a push toward last week's highs near 120.60. This bullish action would be in the context of consolidation of a bearish trend.
Fan Yang CMT
Chief Technical Strategist