GBPJPY takes a breather after falling from a swing high of 135.65 on July 25, moving sideways around a thirty-three-month low of 128.75. It’s noteworthy that while the latest move down printed a lower low, the RSI points to positive divergence with the price action, suggesting that a corrective upside wave may be next.
The relatively flat momentum indicators support the very short-term sideways move. The MACD has flattened above its trigger line, whereas the RSI is hovering between the oversold and neutral 50 level.
To the upside, if the price manages to move above 128.75, initial resistance could come from 130.00, which is the area around the 50-day simple moving average (SMA) and the lower band of the Ichimoku cloud. Climing higher, the bulls could stall at 132.50, which is the 23.6% Fibo retracement level of the down leg from 146.50 to 128.10. If buyers insist and pass the channel’s upper line, the 38.2% Fibo of 135.12 could come into play.
If sellers dominate, the 126.20 support may be tested, which is the 138.2% Fibo extension of the up move from 132.48 to 148.85, before seeing support around 124.00, where the lows from October 2016 lie.
For now, the very short-term outlook is sideways-to-bearish, but if the price were to surpass 135.65, the short-term bias may turn neutral.
