GBP/JPY is expected to prevail its downside movement. The pair accelerated on the downside after the bearish breakout of its horizontal level at 131.00. The previous support now acts as a key resistance and should limit any upside moves. Additionally, the pair broke below the lower boundary of the Bollinger Bands, which could indicate a continuation of the bearish trend. The downward momentum is further reinforced by its descending 20-period and 50-period moving averages, which should continue to push the prices lower. The British pound resumed its slump yesterday as GBP/USD shed 1.1% to a fresh 31-year low of 1.2614. On top of fears of the "hard" UK's exit from the European Union, comments by Prime Minister Theresa May fueled uncertainty for the currency. Ms May highlighted the damaging side-effects of the Bank of England's ultra-low interest rate policy.
Hence, as long as 131.00 holds as a resistance, further decline is expected to the next support at 128.00 and even to 127.00 as possible.
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 128.00. A break below this target will move the pair further downwards to 127.00. The pivot point stands at 131. 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 132.30 and the second one at 133.25.
Resistance levels: 132.30, 133.25, 134.10
Support levels: 128, 127, 126
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