GBPJPY is looking more bullish in the short to medium term as it extends its gains from March’s 5-month low of 144.98 to above the 151 handle. The pair has been trying to break above the Ichimoku cloud during the past two sessions but failed on Friday to close above it. Prices are back above the cloud today, rising to 2-month highs.
A successful daily close above the cloud top is possible given the bullish short-term indicators and would strengthen the current upside momentum. The RSI is trending upwards in positive territory but has yet to reach overbought levels, suggesting there is scope for additional gains in the near term. However, there is a risk of a downside correction according to the stochastic oscillator as the %K line is already in overbought territory and could be about to record a bearish cross with the %D line.
In case of a downwards reversal, immediate support is likely to come from the top of the cloud at 150.75. Not too far down, another support point to watch is the psychological 150 level, which also coincides with the Tenkan-sen line, and further below is the 50-day moving average (MA). A breach of the 50-day MA (currently around 149.35) would weaken the positive momentum and shift the focus back to the downside.
However, should the pair stick to its current uptrend, resistance could come at the 152 level, while further up, 153.65 could be the next major obstacle. A break above 153.65 could clear the way towards February’s 19-month top of 156.60.
