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GBP/JPY Finds Support at 4H 200-SMA

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The Sterling is looking quite bearish against the Japanese yen following the retracement from the 177.00 level. We have seen a very small recovery in the GBPJPY pair since it collapsed few days ago, taking out the 176.00 support along the way. In addition the pair crossed below the 50-period moving average on the 4-hour chart and is now finding support at the 174.30 level, which coincides also with the 200-period simple moving average.

As it stands, if the selling pressure continues, the next key support level will come at Friday’s low at 174.30. This will be key for the pair, with a break below suggesting that the recent selling was merely a retracement of the longer term downtrend. Further fall will then be limited around the psychological level of 173.00. On the other hand, and remaining to the 4-hour chart, a failure to break below the 174.30 barrier, I would expect the buyers to drive the action back above the 175.90 and towards the psychological level of 177.00.

In the meantime, the 50-period SMA remains above the 200-period SMA, while the MACD is moving upwards above its trigger line in a bearish territory. Furthermore, the RSI managed to escape from its oversold areas and is currently moving slightly above 30, suggesting a stronger pair in the next few days.

That said, all the major data releases, including the BoJ and the BoE Policy meetings this week could change all of this in a heartbeat so it is worth following these very closely.

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