By ForexTime
GBPJPY on the D1 time frame was in a brief uptrend where the bulls prevailed over the bears before a last higher top formed at 172.122 on 21 October. Supply then started to overcome demand with the resulting change in market structure.
A closer look at the Momentum Oscillator reveals a negative divergence between points “a” and “b” when comparing the tops at 170.076 and 172.122.
This could have cautioned technical traders that the uptrend was running out of steam.
After the higher top at 172.122, the price broke through the 15- and 34-day Simple Moving Averages (SMA) and the Momentum Oscillator followed by crashing through the 100 baseline into bearish territory.
A possible critical support level formed when a lower bottom was recorded on 11 November at 163.025.
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The bulls are currently trying to take control of the market again, but a possible resistance level is looming near the 15-day SMA at 167.084 that might cause a lower top to form.
If the GBPJPY breaks through the critical support level at 163.025, three possible price targets could be reached from there.
Attaching the Fibonacci tool to the lower bottom at 163.025 and dragging it to the resistance level near the 15-day SMA at 167.084, the following targets can be calculated:
- The first target is estimated at 160.516 (161.8%).
- The second price target can be expected at 156.457 (261.8%).
- The third and final target may be considered at 149.889 (423.6%).
If the resistance level at 167.084 is broken, the above situation is not applicable any longer and must be re-evaluated.
As long as the bears stay in control of the market, the outlook for the GBPJPY currency pair will remain bearish.
Article by ForexTime
ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com
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