The GBP/JPY pair has witnessed a steep fall after failing to sustain above 172.00 in the European session. The cross sensed selling pressure after Japan’s Bureau of Statistics reported a significant increase in Retail Sales data.

GBP/JPY has been breaking higher in the open on Monday and there are eyes for the 174.00s. However, for the near term, there are prospects of a correction and bears are waiting in the flanks for an opportunity to clean up the length that is vulnerable below 170.85 with 168.80 eyed. The following illustrates the market structures and bias on the weekly, daily and hourly charts.

There is room for a move higher into weekly resistance while climbing the supporting trendline.

The daily chart shows that the price is hugging the trend but the price is decelerating on the bid.

This is where the near-term opportunity might evolve. The price is reaching higher, but should there be a break of structure, there is plenty of length for the price to work through on the downside below the recent lows as marked on the chart at 170.85 with 168.80 eyed.

The GBP/JPY daily chart shows the pair is upward biased and with a clear path toward testing the February 2016 highs at around 175.01. However, as price action registers higher highs, oscillators, namely the Relative Strength Index (RSI) do not, so a divergence between price action and RSI could open the door for a reversal. The following key resistance areas are the psychological levels 172.00, 173, 00, and 174.00.

Otherwise, the GBP/JPY first support would be the 170.00 figure, which could open the door for further losses once cleared. The following support area would be the October 27 daily low at 168.82, followed by psychological 168.00.

GBPJPY Hawkish Biased

Oct 31 2022

Stop Loss -0.75%

Holding time 1d4hr

169.871

Entry price

168.594

Stop loss price