Significant Trading Levels and Zones

Significant Trading Levels and Zones


GBP/JPY Technical Analysis

  • Important Data for GBP Due Tomorrow, Including Q1 GDP
  • GBP/JPY Price Showing More Weakness

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GBP/JPY Daily Price Chart (April03, 2017 – May 09, 2019)

GBP/JPY Price- Daily Chart

Downtrend Gaining Momentum

Since mid-April, GBP/JPY has been leaning to the downside from the lower high created on April 12 at 147.01 to the April 25 lower low at 143.76. After that it rallied, but on May 6 the price opened with a breakaway gap to the downside, showing more weakness. The following day the price broke below 144.80 and pushed towards the levels mentioned in last week’s article: What Does Trading Above 144.80 suggest?

Yesterday, May 8, GBP/JPY broke below 143.21 but then rallied to close at that level, with sellers likely taking profit. Today, the price moved further to the downside where it bounced from 142.23, where the lower upside trendline on the advanced trendlines fan originated from Aril 17, 2017.

The Relative Strength Index (RSI) has declined from 57 on May 3 to 33 today, emphasizingthe strength of the bearish momentum and coming closer to the 30 oversold boundary.

To Sum Up, a close below 143.21 would suggest a continuation of the move lower towards the bottom of the trading range at 141.90. However, the price needs to clear the support zone at 142.09 – 142.04 first. Closing below 141.90 would encourage GBP/JPY to swing lower towards the zone between 141.04 (the 50% Fibonacci retracement of the previous move) and 140.94. Meanwhile, support levels at 141.78, 141.55 and 141.33 need to be monitored.

What if GBP/JPY remainsabove 143.21?

Closing within the higher trading range could be the start of an upside movement towards 144.80. A series of resistance levels at 143.33, 143.63, the zone between 144.04 and 144.17, and 144.40 need to be watched along the way.

GBP/JPY Two-Hour Price Chart (April 09 –May 09, 2019)

GBP/JPY Price- 2H Chart

Oversold

Today, May 9, GBP/JPY has broken below 142.81, where the downward-sloping trendline from the April 15 high checks in, printing at 142.23 – the lowest level in nearly three months. If the price breaks higher and remains above 142.78, it would suggest a bullish bias, hinting that prices might push to the area between 143.21 and 143.33, contingent on prices breaking through resistance at 142.85 and 143.00 first.

If the movement was to the downside, and prices trade below 142.43, it would suggest a move to test the uptrend line that sits today at 142.22. If the price breaks and remains below there, it would encourage GBP/JPY to push towards 141.90, taking into consideration the support zone mentioned above.

Meanwhile, the Relative Strength Indicator (RSI) has fallen to 23, with any fall under 30 warning that the pair has been oversold.

Written By: Mahmoud Alkudsi

Please feel free to contact me on Twitter: @Malkudsi

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