GBPJPY continues to bounce between the 140.70 and 139.40 boundaries, constructing a rectangle which looks to be a bullish formation as the pattern follows an uptrend started from the 3-year low of 126.53. The double bullish cross of the 20-day simple moving average (SMA) with the longer 50- and 200-day SMAs is another encouraging trend signal if sustained.
In terms of momentum, the recent sideways move in the RSI, which continues to hold above its 50 neutral mark and the falling MACD, reduces the odds for an important upside move.
Nevertheless, a significant break above the 140.70 resistance that coincides with the 61.8% Fibonacci of the downleg from 149.47 to 126.53 could confirm the continuation of the upward pattern. On the way up, the rally could take a breather around the tentative long-term downtrend line stretched from the 2018 peak of 156.59. In case the bulls manage to forcefully breach that obstacle too, which currently intersects with the 143.70 former support, the spotlight will turn to the 146.50 barrier.
Alternatively, should the pair drop under 139.40 and the lower line of the rectangle, all eyes will shift to the 138.00-138.40 zone, captured by the 200-day SMA and the 50% Fibonacci. Failure to hold above that region could extend the slide into the 136.50-135.50 restrictive area.
Meanwhile, in the three-month picture, buyers keep the upper hand as the pair maintains its positive trend above the 135.50 number.
In brief, resistance at 140.70 and support at 139.40 will remain under the spotlight in the short-term, while in the medium-term window a downgrade of the positive outlook would only happen below 135.50.
