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by Charalambos Pissouros

Is GBP/JPY Ready for Another Dive?

GBP/JPY has been trading in a consolidative manner since Monday, between the 142.00 support barrier and the resistance of 142.65. That said, in the bigger picture, the rate remains below the upside support line drawn from the low of the 15th of August, as well as below the downtrend line taken from the peak of the 8th of November. Therefore, we would consider the near-term outlook to still be negative.

Currently, the rate is testing 142.00 barrier, which is the lower end of the aforementioned very-short-term range, the break of which may initially aim for our next support zone, at around 141.50, marked by the lows of the 11th and 12th of December. Another dip below 141.50 may allow the bears to drive the battle towards the lows of the 20th and 21st of August, at around 140.65.

Turning our gaze to the short-term momentum indicators, we see that the RSI has turned down from a bit below its 50 barrier, while the MACD, already negative, has just touched its toe below its trigger line. These indicators detect slightly negative momentum and support somewhat the notion for further declines in this exchange rate.

On the upside, we would like to see a decisive break above 143.25 before we start examining whether sellers have abandoned the battlefield. Such a break may encourage the bulls to put the 143.90 hurdle on their radars, the break of which could carry more bullish implications, perhaps opening the path towards our next resistance of 144.55, defined by the high of the 5th of December.

GBP/JPY 4-hour chart technical analysis

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