- GBP/JPY may have reversed trend following the steep decline on October 31.
- More downside will likely find support at major moving averages, momentum is bearish.
GBP/JPY rose up after breaking out of the Right-Angle Triangle it formed during October and reached the minimum price expectation for price pattern, at 199.59, the 61.8% Fibonacci extension of the height of the Triangle at its widest point, higher (blue-shaded rectangle).
GBP/JPY 4-hour Chart
GBP/JPY was in an established short and medium term uptrend as it rose following the break out, however, since the sell-off of October 31, the short-term trend might have reversed. If the short-term trend has changed, it will suggest the bias is to the downside given the technical analysis dictum that “the trend is your friend”. Indeed it is possible the trend may have already reversed and prices could be biased to going lower. If so, now would be the ideal time to enter a low risk short position.
A break below 195.37 would supply added confirmation and likely see a sell-off down to a target at 194.11 and the 200-day Simple Moving Average (SMA) (not shown) followed by 192.64 and the 50-day SMA (also not shown). These heavy-duty SMAs, however, are likely to provide support to falling prices.
The blue Moving Average Convergence Divergence (MACD) momentum indicator line has crossed below the red signal line and also below the zero level, and taken together these are bearish signs.
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