GBPJPY sank by almost 2.0% on Thursday following the rejection around the 20-day simple moving average (SMA) and the 23.6% Fibonacci retracement level of the 2020-2022 uptrend at 160.75.
The decline stretched to January’s support region of 156.72 early on Friday, with the momentum indicators dashing hopes for a meaningful recovery. Specifically, the MACD has resumed its negative momentum, while the RSI has changed trajectory back to the downside, currently standing comfortably above its 30 oversold level. Likewise, the stochastic oscillator is still some distance away from 20 despite drifting lower, warning more losses ahead.
In other discouraging signals, the 50- and 200-day SMAs are heading for a death cross for the first time since 2020, suggesting that the previous uptrend has probably peaked.
Additional declines could revisit January’s low of 155.34, a break of which could drive the price directly to the 38.2% Fibonacci level of 153.73. Sliding below the 152.53 trough too, the bears could next target the 151.00 and 150.00 psychological numbers.
In the positive scenario, where the pair returns above the nearby resistance of 158.00, the bulls may push for a close above the 20-day SMA at 160.00 and the 23.6% Fibonacci. If they succeed this time, the recovery could pick up steam towards the 200- and 50-day SMAs, currently seen within the 163.55-164.15 region. Running higher, the price may face a challenging battle around the tentative descending trendline around 166.75.
In summary, the sell-off in GBPJPY seems to have more room to run. A step below 156.72 is expected to renew downside pressures in the short term.
