GBPJPY went as high as 133.49 but found strong resistance and fell sharply. The currency pair then went as low as 130.01 before closing for the week at 130.68.
On one hand such a strong fall would make us expect some more downward move but on the other hand the current price level is quite sensitive to support for GBP/JPY. We need to consider the flowing points while analyzing the probable moves in the coming days:
1) 130.00 is now a psychological support and the support came just near 130.00. A decisive break of this is required to expect any further downward moves.
2) For two consecutive days GBP/JPY tried to break the support of 22-day EMA but immediately found support. A decisive break of this is required to expect any further downward moves.
3) This support for past 2 trading days was also at the level of Kijun-sen support of daily Ichimoku cloud.
Considering the above we see that there are three strong support levels working at the current price level. A decisive break of these is required to have our focus for further downward movement.
If firm break of 130.00 takes place then on the downside we will expect frequent support in 129.00 ranges. Any strong break of 129.20 may take GBPJPY towards 128.20 and then possibly towards 127.20. 127.20/127.25 will represent 38.2% Fibonacci retracement of the upward move during January 14th to march 22nd. It is also slightly below 55-day EMA support and above the strong support level of March 7th i.e. 126.54.
Please note that we are taking the current downward move just as a consolidation/correction and our overall outlook stays bullish and we expect another upward move either if 130.00 support is not broken or from one of the support levels mentioned above.
On the upside a break of the recent high of 133.49 should take GBP/JPY towards the psychological resistance of 135.00. A break of that is very important to expect further upward move first towards 136.20 and then 137.00.
Further Readings:
1) GBP/JPY forecast for weekly outlook of the currency pair.
2) Daily technical analysis of GBP/JPY.
3) EUR/JPY outlook.
By forexabode.com