- GBPJPY is in the green again today, a tad below its 9-year high
- The BoJ meeting failed to stop the yen’s underperformance; intervention threat lingers
- Momentum indicators are clearly on the GBPJPY bulls’ side
GBPJPY is trading higher again today, recording its fourth consecutive green candle and preparing to test the June 24, 2015 high at 195.87. The market is digesting the BoJ meeting’s outcome, with the lack of hawkish rhetoric maintaining the underperformance of the ailing yen and increasing the pressure on the Japanese finance ministry to intervene.
Momentum indicators have taken notice of the recent upside sentiment in GBPJPY. More specifically, the Average Directional Movement Index (ADX) edged above its 25-threshold, pointing to a tentatively bullish trend. Similarly, the RSI has climbed to a 2-month high, confirming the ongoing bullish pressure in GBPJPY. More importantly, the stochastic oscillator has returned inside its overbought territory (OB) but maintains a good gap from its moving average. It can stay in the OB area for a while before signalling the possibility of a correction.
Should the bulls remain hungry, they could try to overcome the June 24, 2015 high at 195.87 and record a new 9-year high. They could then set their eyes on a much bigger prize – the February 6, 2003 high at 198.59.
On the other hand, the bears are desperate to regain market control and gradually push GBPJPY towards the July 21, 2005 low at 192.57. They could then test the support set by the January 2, 2024 trendline and the busy 189.61-191.07 range, which is defined by the 50-day simple moving average (SMA).
To sum up, GBPJPY continues its journey north as the dovish BoJ meeting increases the pressure on the Japanese authorities to react in order to control the ongoing yen devaluation.
