GBP/JPY Triangle Support Pullback

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GBPJPY recently tumbled below the descending triangle support on its 4-hour time frame, and price could be due for a retest soon.

The Fibonacci retracement tool shows that the 50% level lines up with the broken support at the 152.50 minor psychological mark, which could hold as resistance. A shallow pullback could already find sellers at the 38.2% Fib near the 152.00 major psychological mark while a larger correction could reach the 61.8% Fib near 153.00.

The 100 SMA is below the 200 SMA to indicate that the path of least resistance is to the downside or that the selloff is more likely to resume than to reverse. The gap between the indicators is widening to reflect strengthening selling pressure. The 100 SMA is also near the triangle top and 61.8% Fib to add to its strength as resistance.

RSI is still pulling higher, though, and the oscillator has plenty of room to climb before reflecting overbought conditions. This suggests that buyers might be in control for a bit longer before sellers take over. Stochastic is just starting to climb out of the oversold region to suggest that buyers are about to return.

Risk aversion has been in play these days, favoring the lower-yielding Japanese yen against higher-yielding ones.

The emergence of the Omicron variant has spread a lot of uncertainty in the markets, prompting some countries to impose travel restrictions once more. Many are worried that another round of lockdowns might be in order, likely resulting to weaker global growth.

There are no major reports throughout the week from the UK and Japanese economy, so risk sentiment might be the main driver of price action. More concerns about the Omicron variant could keep a lid on risk-taking while indications of vaccine success against the virus could provide some reassurance.

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