- GBPJPY started retreating from the top end of a 1-1/2-week-old ascending trend-channel hurdle.
- A subsequent break through the channel support points to a bullish exhaustion and favour bears.
- Some follow-through weakness below the 141.00 handle might prompt additional technical selling.
- Any further decline below mid-140.00s could be seen as a buying opportunity and remain limited.
It’s Throwback Thursday and time to revisit our take on GBJPY, initiated last Wednesday (August 26). As was anticipated, a sustained strength beyond the key 140.00 psychological mark led to some aggressive technical buying and pushed the pair to over six-month tops earlier this week.
The positive momentum faltered near a resistance marked by the top end of 1-1/2-week-old ascending trend-channel. A subsequent fall below the channel support/100-hour SMA suggests that the recent bullish momentum might have run out of the steam and shifts the near-term bias in favour of bearish traders.
Meanwhile, oscillators on the 4-hourly chart – though have been losing positive momentum – are yet to confirm a bearish bias. This coupled with the fact that RSI and MACD indicators are still holding in the bullish territory warrant some caution before placing any aggressive bearish bets.
That said, some follow-through weakness below the 141.00 handle might accelerate the corrective slide towards the 140.60-50 horizontal support. However, any further weakness might be seen as a buying opportunity. This, in turn, should help limit the downside near the 140.00 resistance breakpoint.