Bottom line: GBPJPY short to medium term outlook remains bearish against 143.00 mark. Further, the currency is pushing towards 138.00/139.00 resistance zone to carve yet another lower high. Bulls might remain in control over the next few trading sessions.
GBPJPY has managed raise through 137.47 mark from 133.04 lows since September 22, 2020. The anti-risk Japanese Yen has remained under pressure since global equity markets have rallied over the past two weeks. Investors might remain cautious though as GBPJPY might face renewed selling pressure around 139.00 zone. Further, if risk aversion returns, Japanese Yen might find bids coming in.
GBPJPY has managed to stage a counter trend rally after having dropped through 133.00 levels on September 22, 2020. The corrective rally might still have some room left as bulls might be preparing to push through 138.00/139.00 zones, over the near term.
GBPJPY had earlier dropped from 148.00 highs through 124.00 lows, in March 2020. Since then, the currency had remained in control of bulls and pushed through 143.00 mark. Also note that 143.00 is fibonacci 0.786 retracement of the earlier drop.
After hitting the above resistance zone, bears have taken control back and turned GBPJPY sharply lower towards 133.00 mark. The above drop seems to be an impulse wave, which should have been followed by a corrective in the opposite direction.
GBPJPY has managed to rally from 133.00 levels, in line with the counter trend rally as discussed above. Furthermore, please note that fibonacci 0.618 retracement of the above drop is seen towards 139.00 mark. High probability remains for a bearish turn if prices manage to reach there.
Most traders might be willing to hold long positions taken earlier toward 134.00/135.00 levels. Going forward they might consider to initiate fresh short positions around 139.00 resistance zone, with stop above 143.00 and potential target towards 127.00 levels respectively.
Harsh Japee, Technical Analyst.
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