GBP/JPY Price Outlook: British Pound Vulnerable Below This Level

The British Pound has pared a portion of the recent advance against the Japanese Yen with GBP/JPY down nearly 2.5% from the monthly highs. Price is now testing confluence support and the focus is on this key threshold heading into next week. Here are the updated targets and invalidation levels that matter on the GBP/JPY charts.

GBP/JPY WEEKLY PRICE CHART

Technical Outlook: GBP/JPY broke below an ascending pitchfork formation extending off the 2017 lows back in May with the decline taking the shape of a descending channel off the yearly highs. Price turned just ahead of the 61.8% retracement of the yearly range last month with the pair slipping back below the 52-week moving average last week. Note that the turn was accompanied by an RSI rejection at the 60-threshold and suggests that momentum remains on the side of the bears, for now.

GBP/JPY DAILY PRICE CHART

Notes: A slightly different take on the slope for the daily here shows GBP/JPY testing former downslope resistance, as support this week after turning from the 1.5% parallel. The level in focus is 145.84/97 and is defined by the 38.2% retracement of the August rally and the 100-day moving average. A break/close below this threshold would shift the focus back towards the median-line with such a scenario targeting 144.81 and the key 61.8% retracement at 143.65.

Interim resistance stands at the monthly opening-range lows at 147.20 backed by the 200-day moving average at ~147.90s and the monthly open at 148.25– both areas of interest for possible price exhaustion / short-entries IF reached. Ultimately a breach above slope resistance would be needed to mark the resumption of the long-bias targeting 149.31 and 150.22.

Bottom line: GBP/JPY broke below a multi-week consolidation range with the decline now testing a key near-term support confluence. From a trading standpoint, the break of the monthly opening-range does keep the focus lower – but price is at support. IF the break is legit, look for price exhaustion early next week ahead of the monthly open with a break below this confluence support zone needed to fuel the next leg lower in GBP/JPY.