- GBP/JPY is in the red again today, not far from its recent high
- It has dropped below the January 2, 2024 ascending trendline
- Momentum indicators are in waiting mode for the next key market events
GBP/JPY is trading lower again today as the market is preparing for today’s US labour market report, which could play a key role in the Fed’s outlook. The move from the January 2, 2024 low has been aggressive despite the recent BoJ rate hike but the threat of intervention appears to have already borne fruit. However, the Japanese officials’ resolve could be really tested if another strong rally takes place soon.
In the meantime, the momentum indicators are clearly directionless and trendless.
More specifically, the Average Directional Movement Index (ADX) remains stuck below its 25-threshold, signaling a range-trading market. Similarly, the RSI continues to hover around 50, confirming the current indecisiveness of market participants. More importantly, the stochastic oscillator is trading around its midpoint, pointing to a delicate balance in GBP/JPY.
Should the bulls remain confident, they could try to lead GBP/JPY back above the January 2, 2024 ascending trendline and test the resistance set by the July 21, 2005 low at 192.57. They could then have the chance to record a new 2024 high, above the current 193.52 high, with the next plausible target being in the 195.00 area.
On the other hand, the bears are desperate to regain market control and gradually push GBP/JPY towards the 189.61-189.81 area, which is populated by the March 31, 2004 low and the 50-day simple moving average (SMA). If successful, they could then have a go at testing the support set by the busy 186.65-186.76 range that is defined by the August 22, 2023 high and the 100-day SMA.
To sum up, market participants are mostly on the sidelines ahead of the certain key market events with the GBP/JPY bulls also trying to avoid further provoking the Japanese authorities.