GBP/JPY traded sharply higher on Thursday, after hitting support near the 151.60 zone. Overall though, the pair continues to trade below the downside resistance line drawn from the high of June 24th, as well as well below a longer-term one taken from the high of May 27th. With all that in mind, we would see decent chances for the bears to jump back into the action soon and push the pair down.
The bears may decide to take charge from near the downside line drawn from the high of June 24th. If so, we could see another test near 151.60 soon, the break of which could target the low of June 21st, at around 151.33. If the bears are not willing to stop there either, then a break lower could set the stage for extensions towards the low of July 8th, at 150.65.
Looking at our short-term oscillators, we see that the RSI, although below 50, turned up again and is now near that equilibrium line, while the MACD lies below both its zero and trigger lines, but turned somewhat up as well. Both indicators detect downside momentum, but the fact that they have turned up suggests that some further recovery may be in the works, perhaps for the rate to test the aforementioned short-term downside line.
Now in order to start examining whether the bulls have gained full control of this pair, we would like to see a recovery, not only above the line drawn from the high of June 24th, but also above the other, longer-term one, taken from the high of May 27th. This may be confirmed upon a break above the 154.54 zone, marked by the high of June 25th. The bulls may then get encouraged to climb towards the 155.17 barrier, marked by the highs of June 23rd and 24th, or the 155.50 zone, marked by the high of June 15th. If neither zone is able to stop the advance, then we could see extensions towards the 155.90 or 156.07 levels, defined as resistances by the highs of June 1st and May 28th respectively.
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