GBPJPY has been in a tight range over the past week but still stubbornly active near the tough resistance trendline, which has been cancelling bullish actions for the third consecutive month.
With the price gaining stronger positive traction early on Friday and the RSI escaping a drop below its 50 neutral mark and printing fresh higher highs below its 70 overbought mark instead, the odds are in favor of an upside breakout. Encouragingly, the MACD managed to enter the positive area despite its anemic upturn, backing this narrative as well.
Note that the 50% Fibonacci of the 156.06 – 148.45 down leg at 152.25 and the surface of the Ichimoku cloud are also positioned in the same neighborhood. Therefore, technically, a clear close above this bar is expected to take a rapid turn up to the 61.8% Fibonacci of 153.64. Slightly higher, the price could face some congestion between the 78.6% Fibonacci of 154.43 and the 155.15 resistance territory before approaching the crucial top of 156.06.
On the downside, the 38.2% Fibonacci of 151.35 and the 20-day simple moving average (SMA) have been on the defense against the bears recently. Nevertheless, even if they give way, a negative correction would not result in an outlook deterioration if the long-term dashed supportive trendline drawn from the 2020 lows strictly rejects the bears with the help of the 23.6% Fibonacci of 150.24. Failure to hold above the latter would bring the downtrend from the 156.06 peak back under examination, though the key support of 149.50 and the 200-day SMA could delay any selling practises. If not, a dip below July’s low of 148.45 would give shape to fears of a down-trending market.
In summary, the short-term risk for GBPJPY is still skewed to the upside despite the latest narrow trading, with the bulls expected to pick up steam once the restrictive trendline pulls over.