Title: GBP/JPY Daily Technical Outlook Analysis
Source: Action Forex
Original Author: ActionForex.com Analysis Team
Link: [GBP/JPY Daily Outlook](https://www.actionforex.com/technical-outlook/gbpjpy-outlook/605036-gbp-jpy-daily-outlook-2183/?amp)
Overview
The GBP/JPY currency pair has been exhibiting sustained upward momentum, driven by bullish sentiment and favorable market dynamics. Following last week’s price action, the pair remains firmly within an uptrend, supported by strong economic data from the United Kingdom and relative weakness in the Japanese Yen. The analysis focuses on key technical levels, price trends, and momentum indicators that suggest continued bullish potential, barring any significant reversal signals.
Current Market Position
GBP/JPY closed with notable gains in its most recent trading session and continues to extend its upward trajectory. The bullish trend is still intact, as the pair has maintained trading above short-term moving averages and upward trendlines on the daily chart. The pair opened the current week positively and is attempting to retest previous highs.
The current consolidation in daily charts, occurring after a recent upswing, appears temporary and corrective rather than being the beginning of a trend reversal. Price is showing resilience around recent support levels and is expected to maintain upward direction if these support levels hold.
Key Technical Highlights and Daily Chart Observations
– GBP/JPY continues to trade in a well-defined upward trend channel on the daily timeframe.
– The price has consistently posted higher highs and higher lows, a classical pattern of a bullish trend.
– As long as near-term support zones remain unbroken, there is a higher likelihood of gains continuing toward the next resistance targets.
– Present price action suggests that minor consolidations are providing the market with temporary pauses, which in turn help sustain the broader uptrend.
– Indicators such as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) continue to signal bullish momentum.
Support and Resistance Levels
Understanding the current technical levels is essential in determining potential price movements. The following are key support and resistance zones for GBP/JPY based on recent price structures:
Immediate Resistance:
– 200.00 Psychological barrier: Due to its round-number significance, this level often acts as strong psychological resistance for the pair.
– 201.40 High: This level represents the year’s previous high and serves as the next logical resistance point.
Immediate Support:
– 197.60: This was the low of the recent correction and an important near-term support level.
– 196.65: Represents the next level of structural support if the pair dips below 197.60.
– 194.00: Key structural support zone that could be tested in case of a deeper retracement.
Trend Continuation Scenario
If GBP/JPY continues to hold above the 197.60 level, then the uptrend remains firmly in place. Further gains beyond the 200.00 region would expose the 201.40 resistance level next, followed by the potential for the price to approach multi-decade highs not seen since the early 2000s.
Top factors supporting trend continuation:
– Consistently strong macroeconomic indicators from the UK economy.
– The ongoing dovish tone from the Bank of Japan (BoJ), which continues to depress the value of the Japanese Yen.
– Rising UK government bond yields provide additional support for Sterling in this cross-currency pairing.
Reversal Scenario
A break below current support at 197.60 would be the first real sign of weakening bullish momentum but would still not confirm a trend reversal. Only a sustained breach of the 196.65 level, followed by a close below the 194.00 support region, would indicate the beginning of a medium-term correction or reversal.
Traders should monitor the following reversal signals:
– Momentum divergence: A bearish divergence in RSI relative to price can signal weakening trend strength.
– Bearish candlestick
Read more on EUR/USD trading.