GBP/JPY traded higher today, after hitting once again support near the key hurdle of 143.80. That barrier has been acting as the lower end of the sideways range that’s been containing the price action since March 20th, while the last time we saw a 4-hour candle closing below it was on February 19th. Before March 20th, that level provided strong support on February 22nd and March 11th. Although the price structure within the range has been of lower peaks and lower troughs since the rate tested the upper bound, at around 147.00, we prefer to stay sidelined for now.
Only a clear and decisive break below 143.80 would prompt us to start examining the bearish case. Such a dip would signal the downside exit out of the aforementioned range and may pave the way towards the 143.00 obstacle, defined by the inside swing high of February 18th. Another break, below 143.00, may allow the bears to put the 142.50 level on their radars. That level is marked by the low of February 19th.
Looking at our short-term oscillators, we see that the RSI exited its below-30 zone and moved higher, but it ticked back down before reaching its 50 line. The MACD, although negative, lies above its trigger line, and that’s why we prefer to wait for a move below 143.80 before we get confident on further declines.
On the upside, a clear move above 144.45 could signal that traders want to keep this pair range-bound for a while more. We may then experience further recovery within the range, with the bulls initially aiming for the 145.00 zone. A break above 145.00 could see scope for more upside extensions, perhaps towards the 145.60 hurdle, defined by the highs of April 19th and 23rd.
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