GBP/JPY Bears Eye Drop to 195GBP/JPY closed lower for a third day on Wednesday, with bearish momentum increasing thanks to political tensions in the UK and dovish comments from BOE voting members.
While the daily RSI (2) is oversold, there could still be room for a move to 195 over the near term. Its less than a day’s trading range away using recent volatility levels, and it also sits near the bullish trendline from the May low.
The 1-hour chart shows prices are drifting higher in an apparent corrective fashion, yet prices remain in the lower third of Wednesday’s range. I suspect bears will seek to fade into any pops higher in anticipation of another drop towards 195, near the daily S1 pivot, weekly S and rising trendline.
Should GBP/JPY drop to the lower target area, how prices react could provide clues over its potential to use the level as a springboard or break lower from that pivotal zone.
Market Analyst at City Index and Forex.com
