Market Analysis: GBPJPY Bearish Momentum Weakens
The GBPJPY market bearish momentum appears to be losing steam, signaling the possible end of the prevailing downtrend. After a series of higher highs that culminated in a peak in early June 2024, the currency pair began to retrace, breaking below the key support level at 188.500. This initial decline was sharp, with price action aiming for the 179.450 level. However, as the pair approached this critical level, it encountered significant bullish pressure, triggering a notable bullish reaction.
GBPJPY Significant Zones
Resistance Levels: 196.000, 201.240
Support Levels: 188.500, 179.750
Despite a temporary rise above 188.500, the pair resumed its bearish trajectory. However, the subsequent downward move was short-lived, and the price failed to form a lower low. Instead, it established what can be characterized as a “failed low”, a key indicator of diminishing bearish strength. This failure to create a lower low signals a weakening of the bearish trend and suggests that a potential bullish reversal could be on the horizon.
The situation becomes even clearer when viewed on the 4-hour timeframe. Here, a reverse head-and-shoulders pattern has emerged, a classic bullish reversal formation, further supporting the potential for upward momentum. This technical pattern suggests that GBPJPY bullish sentiment is building, and a sustained move higher could be imminent.
Moreover, moving averages on both the daily and 4-hour charts align with this bullish outlook. On the daily chart, the pair is trading above the moving average, suggesting a trend reversal is underway. On the 4-hour chart, the moving average also shows a bullish signal, as the price remains well above the indicator, reinforcing the potential for further gains.
Market Expectation
Given these technical signals, a bullish reversal appears increasingly likely. If the price can sustain its rise above the 188.500 level, the next target for GBP/JPY would be the 196.000 level, with the possibility of breaking even higher. The combination of weakening bearish momentum, bullish chart patterns, and favorable moving average trends can be used by forex signals to point to a significant shift in market sentiment for the pair.
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