VSheart of the week – GBP / JPY
Potential bearish move in GBP / JPY to retest key support (short term technical analysis)Time stamp: Sep 19, 2021 at 11:30 a.m. SGT
Source: CMC Markets (click to enlarge the chart)
- A mega week ahead for global monetary policies where we have three key central bank meetings in the week starting September 20; Bank of Japan (Wednesday), Fed FOMC and Bank of England (both Thursday).
- The GBP / JPY cross has charted an interesting technical analysis pattern ahead of the aforementioned key monetary policy decisions, which may lead to an environment of higher volatility before and after these decisions are announced.
- Longer term (see daily chart), GBP / JPY plotted a potential head and shoulders downside reversal pattern as its price shares hit a 52-week high of 156.09 on May 28 with its corresponding key support. configuration area at 149.30 / 148.50. This observation suggests that the major uptrend phase from the March 18, 2020 low at 124.05 may have reached a point of exhaustion that could trigger a possible multi-month downward corrective movement via breaking support. neck line key 149.30 / 148.50.
- In the shorter term (see 4 hour chart) momentum remains bearish as seen in the last observation seen in the 4 hour RSI oscillator where it retested and retreated by a key corresponding resistance at the 52% level. . Additionally, price shares have remained below downward resistance in place since its recent July 29 high.
- Therefore, if the key medium term resistance of 152.85 is not breached on the upside, the GBP / JPY could create a further potential decline to retest the 149.30 upper limit of the line support. neck of the “Head and Shoulders” configuration. On the other hand, a 4 hour close above 152.85 cancels the bearish tone for a compression towards the next resistance 154.20 (also a group of Fibonacci retracement and expansion levels).