- GBPJPY faced rejection near three-week-old ascending trend-line support breakpoint.
- The set-up seems tilted in favour of bearish traders, though warrants some caution.
- Fresh bearish positions should be accompanied by a stop-loss near the 137.35-40 area.
Having struggled to find acceptance above 200-period SMA on the 4-hourly chart, GBPJPY faced rejection near a three-week-old ascending trend-line support breakpoint. The subsequent downfall reversed the previous day’s positive move and might have already set the stage for an extension of this week’s retracement slide from the 50% Fibonacci level of the 142.71-133.04 recent downfall.
The negative outlook is further reinforced by bearish technical indicators on the 4-hourly chart. However, oscillators on the daily chart are yet to confirm the bearish bias and thus, warrant some caution for aggressive traders. Hence, it will be prudent to wait for some follow-through selling below the 136.00 handle before positioning for any further near-term depreciating move.
The pair might then accelerate the slide towards the 23.6% Fibo. level, around the 135.30-25 region, before eventually dropping to challenge the key 135.00 psychological mark, or monthly swing lows touched on October 2.
On the flip side, the 38.2% Fibo. level, near the 136.70 region, now seems to act as immediate resistance. This is closely followed by the 137.00 handle (200-period SMA), which if cleared could push the pair back towards the 137.35-40 support-turned-resistance. The latter should act as a stop-loss level of bearish traders as the pair might then aim back towards testing the 137.80-85 supply zone, which coincides with the 50% Fibo. level.