GBPJPY has been on a steady uptrend and may be due to resume its climb, as a bullish divergence has formed on its 1-hour time frame. Stochastic made lower lows while price made higher lows, with the oscillator already starting to move out of the oversold zone.
This indicates that the upward momentum could push price back to the previous highs near the 180.00 major psychological resistance eventually. Price has to break above the current consolidation pattern at the 38.2% Fibonacci level before confirming the return of buying pressure.
MACD is also hinting at possible pickup in price action, as GBPJPY resumes its ascent. Strong momentum could even lead to the formation of new highs beyond 180.00. However, a deeper pullback to the Fib levels and trend line is still possible, as price could also find support near the 100 and 200 simple moving averages.
By Kate Curtis from Trader’s Way