GBPJPY dropping toward first significant support

As we noted in our previous technical analysis, the GBPJPY cross rose to the strong resistance zone near 143.50 but failed to breach this level as sentiment deteriorated.

On Tuesday, equities dropped around the globe as Apple said it wouldn't be able to meet its quarterly guidance due to the coronavirus and traders rushed to safe havens, such as the yen or gold. Thus, the GBPJPY cross was down 0.3% during the London session, changing hands at around 142.45.

The first significant support seems to be near previous lows of 142.20, and if the price declines below this level, the short-term top was most likely posted this week. Another level to watch then could be at 142.00, where the uptrend line from February lows is located. And if bears push sterling below this support as well, the next demand zone is expected at around 141.25.

Alternatively, the intraday resistance now seems to be slightly below the 143.00 threshold. As long as the GBPJPY cross remains below the 143.50 zone, the medium-term outlook appears neutral to bearish. Only a strong breakout above 143.50 could lead to a further rally, targeting previous swing highs of 144.40.

Tomasz Wisniewski Head of Education