Technical Analysis – GBPJPY seems to be looking for recovery after steep losses

Melina Deltas, XM Investment Research Desk

GBPJPY has come under renewed selling pressure over the past four days following the upside run towards the 15-week high of 139.80. The pair declined beneath the 100- and 200-day simple moving averages (SMAs) but found strong support at the 20-day SMA earlier today.  

Looking to the short-term oscillators, the stochastic and the RSI promote slight improvements around their oversold and neutral marks respectively, despite diminished directional momentum. Yet, the bullish crossover within the 20- and 40-day SMAs maintains a bullish tone in the market.

A successful attempt above the 100-day SMA could raise the likelihood of the price meeting the 200-day SMA currently at 137.50. More gains could lead the price towards the 15-week peak at 139.80 and the 140.90 resistance level, while investors could look for more bullish moves leading up to the 144.95 barrier, identified by the high on February 21.

On the flip side, a continuation of the recent bearish movement could find immediate support at the 40-day SMA, which stands near the 133.00 psychological mark. A drop beneath this key line and the short-term ascending line could find support at 129.30, registered on May 18. Even lower, a minor level at 127.27 may halt bearish movement.

Summarizing, GBPJPY has been in a bullish structure since March 18, but it is currently creating a bearish correction which may end near the 133.00 handle. If not, the price could shift its bias to neutral in the short-term.