- GBP / JPY remained under intense selling pressure for the second consecutive session on Friday.
- The setup may already have shifted in favor of bearish traders and is pointing to further weakness.
The crossing GBP/JPY witnessed strong selling for the second straight session on Friday and fell to month-long lows during the middle of the European session. The cross was last seen hovering near 137.00, just above the 50% Fibonacci level of the 133.05-140.71 move up.
In recent price action, the GBP / JPY cross has repeatedly failed to hold its gains above the key psychological level of 140.00. The subsequent sharp decline could have turned the bias in favor of bearish traders and supports the prospects for an extension of the depreciation movement.
The negative outlook is reinforced by the fact that technical indicators on the daily charts have only just started to move into bearish territory. Therefore, some follow-up weakness, towards the 136.00 confluence support test, now seems like a clear possibility.
This level is part of the 61.8% Fibonacci level and a short-term rising trend line. This is closely followed by the very important 200-day SMA, around the 135.60 region, below which the GBP / JPY cross appears poised to prolong its downtrend amid no-deal Brexit fears.
On the other hand, any attempt at a recovery move could now be seen as a short opportunity near the 137.70 region (38.2% Fibonacci level). This, in turn, should limit the upside near 138.00. A sustained move further, while it seems unlikely, could trigger a short hedging move.
Daily chart
Technical levels
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