GBPJPY has been consolidating over the past month after reaching a 7½-month high of 183.99 on July 5, but the negative risks appear to be accumulating. The worsening short-term bias is supported by the momentum oscillators.
The RSI is sloping downwards, dipping slightly below the 50 neutral level, while the MACD remains below its red signal line, though above zero, having declined considerably from its June highs.
Moreover, the price has just breached the 20-day simple moving average (SMA) and is headed back towards the 50-day SMA, which only last week successfully defended the long-term uptrend when the pair briefly spiked below it. The area around the 50-day SMA is forming into a crucial support zone as the Tenkan-sen line is about to intersect it and both look set to enter the Ichimoku cloud in the 179.75 region.
If the price is able to hold above this support area, the bulls will have another chance to regain control and revisit the July top of 183.99. Higher up, the focus might turn to the 189.00 level, which acted as resistance back in 2014 and 2015.
However, if the price breaks below the 50-day SMA and plunges into the cloud, the next support might not come until the 176.00 level near the July trough. Even lower, the slide may extend until the congested region of 172.35 before sellers aim for the 200-day SMA at 168.10.
In brief, the downside risks are rising for GBPJPY and it may be up to the 50-day SMA again to decide whether the price bounces off it or breaches it. However, the longer-term uptrend should stay intact as long as the pair holds above the ascending trendline.
