Technical Analysis – GBPJPY hits 5½-month high; positive bias intact

Melina Deltas, XM Investment Research Desk

GBPJPY reached a five-and-a-half-month high of 139.50 earlier today, continuing the buying interest that started on June 29.

Also, the price remains above the 20- and 40-period simple moving averages (SMAs) and the MACD oscillator is strengthening its positive momentum above its trigger line. However, the RSI indicator is flattening slightly below the overbought zone. The mixed signals in the technical indicators are suggesting a possible pullback.

In case that the price overcomes the five-and-a-half-month high of 139.50 could it flirt with the inside swing low of 140.83 achieved on February 4. More gains could lead the market towards the 142.33 resistance, being the low of February 18.

Alternatively, the market could move lower, reaching the 20- and 40-period SMAs at 138.70 and 138.53 respectively. If the selling interest persists, the price could hit the 137.83 support and the 23.6% Fibonacci retracement level of the up leg from 131.93 to 139.50 at 137.72 and the 137.40 support.

Concluding, the market has been in an upward movement with the 200-period SMA providing strong support and a drop beneath that level could switch the bias to neutral.