As a result of declines from August 2015 on GBPJPY, pair falls as low as 125.50, where in October last year there was a bullish response. Since then, we have seen relatively dynamic growth as a result of this instrument arrived in the vicinity of level 147.80 defeated after results of last year’s referendum, when British decided to leave EU .
It is worth noting that this level has been a major resistance in the past and after defeating as a support. This also caused that also in December last year there was a supply reaction. Over the next few weeks we have seen advantage of supply. These falls were not too dynamic, but as a result of the announcement made by the British Prime Minister, Therese May about early parliamentary elections, we again saw a strong appreciation of sterling pound. These increases led GBPJPY to regain ground around 147.80, where supply reaction once again occurred last week.
Taking into account the essence of the currently tested resistance, its permanent rejection or overcoming could determine the future trend in long term. The closest resistance is in area of 164.00 and the nearest support is April minima of 136.00.
Looking at H1 chart, we note that as a result of last week’s downturn, the market reached local support at 145.75, where today bullish response has occurred. We are currently re-testing local resistance zone, where first supply response has already occurred. So if declines are continued in nearest future and the market will overcome today’s H1 chart minima, there will be a sequence of increasingly lower highs and lows, which might argue for a permanent rejection of the previously mentioned 147.80 level and continuation of declines in the near future.