GBP/JPY plunged today and reached an important confluence area, but failed to stay lower signaling that the bears are exhausted in the short term. Price continues to stay above some very important support levels (resistance turned into support) and maintains a bullish perspective despite the minor drop. The pair dropped even if the Nikkei stock index is trading in the green. The Cable dropped versus all its rivals today, not only versus the Yen.

GBP/JPY is narrowing on the short term, but I hope that we’ll have a clear direction and a trading opportunity very soon.

I’ve added the Nikkei’s chart to show you why the Yen could depreciate versus the Cable in the upcoming period. You can see that the index is trading in the green and tries to reach the 23000 yesterday’s high. The index maintains a bullish perspective and is strongly bullish after the valid breakout above the lower median line (LML) of the major ascending pitchfork. Technically, the next major upside target will be at the median line (ML) of the major ascending pitchfork but is premature to talk about this upside target because this is too far.

The GBP/JPY erased the last three day’s gains and has retested the 148.44 static support and the warning line (WL1) of the major descending pitchfork. Price touched the confluence area formed by the mentioned support level, but failed to breakdown or to stay on it. The rate could move in range on the short term and could start another upside movement in the upcoming period. We’ll have a great buying opportunity after the retest of the warning line (wl1) of the ascending pitchfork.

It is expected to climb much higher because seems like that we have a valid breakout above the WL1, the rate has come down to retest the former resistance and to confirm the breakout. Only a drop below the WL1 will signal a larger drop in the upcoming period.