GBP/JPY Poised for Further Decline as Bearish Signals Dominate

Warren Takunda

Economic

Summary:

GBP/JPY faces increasing downward pressure, with technical indicators aligning to confirm a bearish trend.

SELL GBPJPY

Close Time

CLOSED

195.800

Entry Price

189.560

198.000

206.997 -0.103 -0.05%

167.7

Pips

Profit

189.560

194.123

Exit Price

195.800

Entry Price

198.000

The GBP/JPY currency pair is experiencing mounting selling pressure, with the daily chart revealing a bearish undertone. As of Thursday’s European session, the pair trades around 195.80, paring earlier gains and staying within a descending channel pattern that has defined its trajectory in recent sessions. This price action reflects a market still grappling with a broader downturn fueled by weakening technical indicators and a risk-averse sentiment.

A deep dive into the technical landscape paints a grim picture for GBP/JPY bulls. The nine-day Exponential Moving Average (EMA) remains firmly below the 14-day EMA, signaling persistent weakness in short-term momentum. This alignment underscores a market where bearish forces are maintaining control, leaving little room for optimism in the near term.

The Relative Strength Index (RSI), a critical momentum oscillator, hovers just below the neutral 50 mark. This subtle but crucial positioning further reinforces the pair’s bearish inclination, suggesting that sellers are likely to dominate unless a strong catalyst emerges.

Additionally, GBP/JPY has settled near the lower boundary of its descending channel at the 193.50 level. This zone serves as the immediate support and a critical juncture for price action. A decisive break below this support could accelerate losses, potentially dragging the pair toward the two-month low of 189.56, last seen on September 30.

On the upside, immediate resistance is evident at the nine-day EMA of 196.46, followed closely by the 14-day EMA at 196.63. These levels represent hurdles for any potential recovery attempts, as sellers are likely to defend these zones vigorously.

Should the pair manage to breach the upper boundary of the descending channel, located around 197.70, the bearish bias could be nullified, paving the way for a retest of the four-month high at 199.81, recorded on October 30. However, given the prevailing market dynamics, such a scenario seems increasingly improbable without a significant shift in sentiment.

The pair’s recent price behavior further substantiates the bearish outlook. GBP/JPY briefly tested the 197.78 resistance earlier this week but failed to sustain gains, retreating to its current levels. This inability to hold higher ground confirms the dominance of sellers, who have effectively capped upward momentum.

Adding to the bearish narrative, the pair is consolidating near the 55-day Moving Average (MA55), which acts as a dynamic resistance. Stochastic oscillators also indicate a downward bias, suggesting that fresh bearish momentum could drive the pair lower in the coming sessions.

The immediate focus is on the 193.50 mark, aligning with the lower boundary of the descending channel. A breach of this level could expose GBP/JPY to further declines, with 194.10 and 194.80 acting as interim targets. Beyond this, the two-month low at 189.56 becomes a realistic downside target.

On the flip side, resistance at 196.46 (nine-day EMA) and 196.63 (14-day EMA) serves as initial barriers. The upper boundary of the descending channel at 197.70 represents a more significant hurdle, and only a decisive breakout here could signal a shift in trend.

TRADE RECOMMENDATION

SELL GBPJPY

ENTRY PRICE: 195.80

STOP LOSS: 198.00

TAKE PROFIT: 189.56

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