- GBPJPY closing in to pre-intervention levels
- BoJ has the habit of intervening during bank holidays
- Momentum indicators remain bullish
GBPJPY is edging higher again today, trading very close to the levels that forced the BoJ to intervene twice in late April. This pair has been experiencing a non-stop rally from the early May lows, quickly erasing the post-intervention correction. With Monday, May 27 being a bank holiday in the US, there is an opportunity for the BoJ to intervene, if deemed necessary.
In the meantime, momentum indicators remain bullish. More specifically, the Average Directional Movement Index (ADX) is edging higher and signaling the presence of the strongest trend in GBPJPY since the March-June 2023 rally. Similarly, the stochastic oscillator has returned to its overbought territory (OB), confirming the current bullish move in GBPJPY. However, the RSI might be showing an early sign of exhaustion as it appears unable to record a higher high.
If the bulls remain confident, they could try to keep GBPJPY above the 198.59 level and then gradually retest the April 29, 2024 high at 200.50. However, if successful, they would be trading at levels that could provoke another intervention from the Japanese authorities and thus potentially suffer losses.
On the other hand, the bears are desperately trying to regain market control. They could attempt to push GBPJPY back below the 198.59 level and towards to the June 24, 2015 high at 195.87. Such a move could open the door to a gradual retest of the 192.57-193.60 area, which is populated by the July 21, 2005 and the 50-day simple moving average (SMA), as well as the January 2, 2024 trendline.
To sum up, GBPJPY continues to climb higher as the bulls appear determined to retest BoJ’s commitment to help the ailing yen.
