- GBP/JPY staged a modest intraday recovery of around 80 pips from the 50% Fibo. level.
- The set-up still favours bearish traders and supports prospects for additional weakness.
- Hence, any subsequent move up might still be seen as an opportunity for bearish traders.
The GBP/JPY cross once again showed some resilience below the 50% Fibonacci level of the 124.07-142.72 move up and staged a goodish rebound from the vicinity of the 133.00 mark.
Technical indicators on the daily chart are still pointing to near-term oversold conditions and seemed to be the only factor that prompted some short-covering move. The cross rallied around 80 pips from daily swing lows, albeit seemed struggling to capitalize on the momentum.
The lack of any strong follow-through buying suggests that the near-term bearish pressure might still be far from being over. This coupled with the fact that the cross is holding well below its important daily moving averages – 50, 100 and 200-day SMAs – favours bearish traders.
Hence, any subsequent move up might still be seen as a selling opportunity and remain capped near the 134.55-60 horizontal resistance. That said, some follow-through selling might still push the cross beyond the key 135.00 psychological mark, towards the very important 200-day SMA.
On the flip side, the 133.15-133.00 region might continue to protect the immediate downside. A convincing breakthrough will be seen as a fresh trigger for bearish traders and pave the way for a further near-term depreciating move towards 61.8% Flevel, around the 131.75-70 area.
GBP/JPY daily chart
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Technical levels to watch
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