GBP/JPY Price Analysis: Recovery needs validation from 163.60
- GBP/JPY picks up bids to reverse post-BOJ losses.
- 200-SMA, one-week-old resistance line challenges buyers amid sluggish oscillators.
- Bears have multiple hurdles before aiming at the 160.00 threshold.
GBP/JPY rises half a percent as it reverses the Bank of Japan (BOJ) led moves near 163.10 during early Thursday morning in Europe. In doing so, the cross-currency pair bounces off the two-week low while poking the 200-SMA.
In addition to the 200-SMA level of 163.10, the downward sloping resistance line from September 13, around 163.60, also challenges the pair buyers.
It’s worth noting that the sluggish MACD signals and the RSI (14) also challenge the GBP/JPY buyers.
In a case where the quote rises past 163.60, the odds favoring its run-up towards the latest swing high near 164.40 and the monthly peak of 167.22 can’t be ruled out.
Alternatively, pullback moves need a clear downside break of the seven-week-old support line, close to 162.00 by the press time.
Following that, multiple levels around 161.40 and 160.70-80 could test the GBP/JPY bears before directing them to the 160.00 psychological magnet. Also acting as a downside filter is the previous monthly low near 159.45.
To sum up, GBP/JPY is likely to pare recent losses but the recovery needs a successful break of 163.60 resistance.
GBP/JPY: Four-hour chart
Trend: Further recovery expected