GBP/JPY - Breakout rally losing momentum
Last weeks breakout following a long period of consolidation has seen GBPJPY make strong gains to the upside and it's about to face its first big test.
The pair has previously seen support and resistance around 154.50 and we appear to be seeing that once more as it pushes for a fifth consecutive day of gains.
The stochastic and MACD on the 4-hour chart suggest that after such a strong run, the rally is losing momentum rapidly, which may indicate that a correction is due.
If we do see further profit-taking and a correction then the first test below could come around 153.75, with a break of this drawing attention back to 152.50, where it saw strong resistance throughout September. This would also fall around the key Fibonacci levels for the recent lows to highs.
A move above 154.50 could see it target the May highs around 156 but again, the momentum indicators will be key, especially if we continue to see divergences, which wouldn't bode well for its potential to break new highs.
The pair has previously seen support and resistance around 154.50 and we appear to be seeing that once more as it pushes for a fifth consecutive day of gains.
The stochastic and MACD on the 4-hour chart suggest that after such a strong run, the rally is losing momentum rapidly, which may indicate that a correction is due.
If we do see further profit-taking and a correction then the first test below could come around 153.75, with a break of this drawing attention back to 152.50, where it saw strong resistance throughout September. This would also fall around the key Fibonacci levels for the recent lows to highs.
A move above 154.50 could see it target the May highs around 156 but again, the momentum indicators will be key, especially if we continue to see divergences, which wouldn't bode well for its potential to break new highs.
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