GBPJPY softly switched back into gains after two consecutive negative weeks following the bounce off a five-week low of 150.96 on Tuesday. The price is currently trying to extend its recovery above the 152.80 level, which is the neckline of the confirmed double top bearish formation. Notably, the supportive trendline drawn from the September 2020 low of 133.00 is also in the same location, while the 200-day simple moving average (SMA) is within breathing distance at 153.35.
The upturn in the RSI and the fast Stochastics, as well as the weakening negative momentum in the MACD are endorsing the latest positive action in the price, though some caution is still warranted as the RSI and the MACD have yet to post higher highs and they are comfortably dipped in the bearish territory.
Nevertheless, if the bulls manage to crawl above the 200-day SMA, which coincides with the 50% Fibonacci retracement of the 148.96 – 157.75 up leg at 153.35, the 20-day SMA and the 38.2% Fibonacci of 154.40 could immediately halt the recovery. Should buying pressures persist, the next stop could be around the 23.6% Fibonacci of 155.68, where another successful step higher may stage a new tough battle with the crucial ceiling of 157.70 – 158.20.
In the event the pair retreats below the 61.8% Fibonacci of 151.75 and closes clearly below the 151.00 mark, the decline could sharpen towards the 148.96 base. A move lover from here would mark a new lower low in the chart, violating the one-year-old neutral trajectory. In this case, selling engagement could grow further, bringing the 147.35 restrictive region next on the radar.
Summarizing, the latest rebound in GBPJPY has not eliminated downside risks yet. For that to happen, the price will need to strengthen beyond 153.35.
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