Technical Analysis – GBPJPY completes double bottom pattern after 5-month downtrend
Posted on September 6, 2019 at 9:02 am GMT
Anthony Charalambous, XM Investment Research Desk
GBPJPY’s bulls accelerated the price up to hover around the 131.80 level, which is the 23.6% Fibonacci retracement level of the down leg from 148.86 to 126.53. The rally yesterday completed a double bottom pattern after breaking above the neckline of 130.68, and now price has possibly paused for the very-short-term, between 131.60 and 132.15.
The 50- and 100-period simple moving averages (SMAs), with their upward slopes, are headed to the 200-period SMA, whilst the MACD and RSI reflect bullish momentum. The MACD, although distanced above its red trigger line in positive territory, has started to flatten, while the RSI also currently in overbought areas has turned down, both suggesting caution of the recent rally.
If the bulls resurface and manage to drive price higher than the 23.6% Fibo of 131.80 and the 132.15 resistance level, the pair could move to test the swing high at the 133.00 psychological number. If the buying continues, another thrust higher to the double bottom target of 134.80 could unfold before reaching the 38.2% Fibo of 135.07.
If sellers pull the price below 131.60, initial support would come at the 130.68 level, before the 200-period SMA, ahead of the 130.00 handle. Dropping further, the coupled SMAs at 129.40 could apply some friction down to the 129.00 barrier. With another decline, the lows of 126.53 could be revisited once the 128.15 support is breached.
Overall, in the short-term a bullish demeanor prevails above the 200-SMA. A move above 133.00 would start to unfold a bullish-to-neutral bias in the short- and medium-term and a break above the 135.65 swing would cement it.