GBPJPY has breached yet another key support level, this time at 145.50. I highlighted this area on Monday when I wrote how sellers were defending the 147.00 handle.
In that commentary, I also mentioned the weekly bearish engulfing candle that developed at descending channel resistance. That sell signal materialized right around the time we looked at how the market structure favored sellers.
Following yesterday’s 144.56 close, the 145.50 level has reversed its role. Instead of acting as support going forward, any retest of the 145.50 level should attract an influx of selling pressure.
Key support, on the other hand, is a little trickier to identify. I would argue that 142.80 is one to watch given the session lows in early September.
However, a strong case could be made for the 143.90 level as well. It’s the location of a weekend gap that developed in late August and early September. The 143.90 area also attracted buyers in late May and June.
That puts the short-term range between 145.50 and 143.90 with a second floor at 142.80. That may sound a bit confusing until you remember that GBPJPY is coming off descending channel resistance at 149.50.
As long as this eight-month channel is intact, the risk-sensitive pair will likely continue to trend lower for some time. I mentioned it a while back, but I wouldn’t be surprised to see GBPJPY trading at 140.00 or lower by the end of the year.
From here, a retest of 145.50 as new resistance could present a selling opportunity. Given the bearish momentum of late, don’t be surprised if sellers continue lower without you. It’s why I made sure to point out several opportunities earlier this month.
If you’re late to the party, you could always check out USDJPY which has yet to make its move. Although it may not exhibit the bearish qualities of GBPJPY due to the U.S. dollar’s tentative safe haven status, it may present a short opportunity in the near future.