Technical Analysis – GBPJPY battling to keep its feet above trendline

GBPJPY came under renewed selling pressure on Thursday but encouragingly it quickly managed to recover its flash drop to 161.26, closing neutral above the ascending trendline once again.

In addition to the above, Thursday’s candlestick reminds of a bullish dragonfly doji candlestick, which is a signal of a possible upside reversal, though whether the price will proceed higher on the following candlestick will confirm the appetite for more buying.

For now, the technical oscillators are displaying some improvement in market sentiment as the RSI keeps trending up, and the MACD is trying to climb above its red signal line in the negative area. Yet, as long as the former remains below 50, some caution is warranted.

If the price was to pick up steam, the 20-day simple moving average (SMA) could resume its resistance role at 163.43. If not, the next obstacle could pop up somewhere between the 50-day SMA and the 61.8% Fibonacci retracement of the 150.96 – 168.70 upleg at 164.53, while a decisive break above the descending trendline at 165.33 could be a bigger achievement. In the event the bulls climb that wall, traders will look for a close above the previous high of 166.31 to shift attention towards the April-June ceiling of 167.80 – 168.70.

On the downside, a durable move below the trendline and the 38.2% Fibonacci of 161.95 could initially push for a close below the support line seen at 160.72. Should the bears snap that bar, the spotlight will turn to the 50% Fibonacci of 159.86, while lower, the 200-day SMA at 158.67 could be the next target.

Summarizing, GBPJPY maintains some buying interest despite its recent consolidation. An extension above 163.43 could be the trigger for more upside.  

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