Featured Trade: GBP/JPY at risk of minor bearish breakdown

Impending potential minor bearish breakdown in GBP/JPY.

Short-term technical outlook on GBP/JPY (25 Mar)



click to enlarge charts

Key elements

  • The 1, 710 pips rally seen in the GBP/JPY cross pair from the 03 Jan 2019 flash crash low of 131.75 has retreated from its key medium-term range resistance at 149.30. The recent bearish reaction seen on 14 Mar 2019 is the 5th attempt to challenge the 149.30 range resistance in place since 16 Jul 2018 (see daily chart).
  • Last Fri, 22 Mar 2019 price action of the cross pair has staged a breakdown below the ascending trendline support in place since the 03 Jan 2019 flash crash swing low area.
  • From last Fri, 22 Mar low of 144.12 to today, 25 Mar Asian session, it has started to consolidate within a minor “Symmetrical Triangle” range configuration.
  • The daily RSI oscillator has staged a breakdown below its corresponding support at the 50 level after a bearish divergence signal seen in the overbought region. In addition, the shorter-term 1-hour RSI oscillator remains bearish below its descending resistance at the 53 level. These observations suggest that the medium-term upside momentum of price action in place since 03 Jan 2019 has started to wane.
  • The key short-term resistance stands at 145.85 which is defined by the pull-back resistance of the former ascending trendline support from 03 Jan 2019 flash crash swing low and the top of the “Symmetrical Triangle”.
  • The next significant near-term support rests at 143.00/142.75 which is defined by a Fibonacci retracement/expansion cluster and the minor congestion area of 18/19 Mar 2019.

Key Levels (1 to 3 days)

Intermediate resistance: 145.30

Pivot (key resistance): 145.85

Supports: 144.55 & 143.00/142.75

Next resistance: 147.50

Conclusion

If the 145.85 key short-term pivotal resistance is not surpassed and a break below 144.55 is likely to reinforce a minor bearish breakdown from its “Symmetrical Triangle” range configuration for a further potential slide to target the next the next near-term support at 143.00/142.75.

On the other hand, a clearance above 145.85 invalidates the bearish scenario for a push up towards the next intermediate resistance at 147.50 (former minor swing low areas of 14/18 Mar 2019 & close to 61.8% Fibonacci retracement of the recent slide from 14 Mar 2019 high to 22 Mar 2019 low).

Charts are from eSignal




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