GBP/JPY is expected to trade with a bearish bias as the key resistance is at 127.80. The pair posted some rebounds yesterday, and is challenging its horizontal level at 127.80, which plays a key resistance, and should limit the upside attempts. Even though a continuation of the technical rebound cannot be ruled out, its extent should be limited. The British pound marked a session low of 1.2130 before bouncing up to close at 1.2251, up 0.4% on day. In the U.K., the government is facing a legal challenge aimed at forcing it to seek parliamentary approval before initiating the formal Brexit process.
To conclude, as long as 127.80 holds on the upside, the pair is likely to return to 125.90.
The pair is trading below its pivot point. It is likely to trade in a lower range as long as it remains below the pivot point. Short positions are recommended with the first target at 125.90. A break below this target will move the pair further downwards to 124.80. The pivot point stands at 127.80. In case the price moves in the opposite direction and bounces back from the support level, it will move above its pivot point. It is likely to move further to the upside. According to that scenario, long positions are recommended with the first target at 128.70 and the second one at 130.00.
Resistance levels: 128.70, 130.00, 131.00
Support levels: 125.90, 124.80, 123.40
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