Technical Analysis – GBPJPY still negative, but losses limited near 200-period SMA

Anthony Charalambous, XM Investment Research Desk

GBPJPY seems to have hit a wall at the 200-period simple moving average (SMA) on the four-hour chart and the 131.60 durable support from July 30. The price decline from the high of 135.73 halted on October 2, with the pair shifting sideways along 131.80, which is the 23.6% Fibonacci retracement of the down leg from 148.86 to 126.53.

The short-term oscillators reflect a stall in negative momentum. The MACD although above its red trigger line, is in the negative territory and looks to move back below. The RSI also in bearish zones is marginally pointing down. The ADX suggests a strong negative outlook remains in place, while the downward sloping 50- and 100-period SMAs concur, as the bearish crossover evolves.

If the bears resurface and manage to decisively move below the 200-period SMA and the 131.60 restraining support, the support region of 130.80 to 130.68 could prove a challenge. Overrunning this region could drop the price to the 130.00 barrier. If selling picks up further, the pair could extend to the 129.00 psychological obstacle.

If the bulls retake control and reverse the price above the 23.6% Fibo of 131.80 and nearby resistance of 132.15, initial interference could come from the 50-period SMA around 132.70. Moving north, the swing high of 133.35 and neighboring 100-period SMA around 133.50 could apply additional downside pressure. Overcoming this could extend the pair back up to the 134.60 resistance ahead of the 38.2% Fibo of 135.05.

Overall, the short-term negative bias is intact. A break below the 131.60 could revive the downfall, while a move above the 100-period SMA could turn it neutral.