GBP/JPY Fast Approaching 20-DMA Near 157.00 Level
Extending its smart recovery from sub-155.00 level on Monday, the GBP/JPY pair on Tuesday moved back above 10-day SMA and is now inching closer to 157.00 handle.
The
pair's up-move on Monday could be attributed to comments from Japan’s
finance minister Taro Aso that the ministry was preparing to intervene
in the Forex market should the Yen starts appreciating again and if
exchange rate volatility remains at an elevated level. The recent
appreciation the Japanese currency has been a cause of concern for the
Japanese policy makers as a stronger domestic currency makes country's
exports less competitive.
The pair has repeatedly managed to
attract fresh bids on its recent dips below 155.00 handle, clearly
suggesting that the pair bears might be losing grip and the pair might
extend its near-term recovery trend. Moreover, the pair continues to
indicate a possible bullish reversal, inverted head & shoulders,
pattern formation on daily charts with 154.50 as shoulder support.
However, the pattern would be confirmed only once the pair breaks-out of
the neck-line resistance, which is still a milestone away from current
levels.
On short-term charts, the pair is fast approaching
20-day SMA resistance near 157.00 handle, which if conquered opens room
for further near-term recovery for the pair.
Technical levels to watch
Above
20-day SMA (157.00 level), the pair could immediately head toward
157.70-75 horizontal resistance, which if cleared should be aiming for
resistance beyond 158.00 round figure mark, near 158.60-65 zone.
On
the downside, day's through near 156.00 level seems to protect
immediate downside. Failure to hold its immediate support could drag it
back towards the very important 155.00 handle support. A decisive
weakness back below 155.00 handle might negate expectations of any
further recovery, turning it vulnerable to further downside in the
near-term.
