- GBP/JPY remains muted in the early European session.
- Cross faces resistance barrier in downward channel.
- MACD throws caution for aggressive buying bids.
GBP/JPY posts modest gains on Tuesday in the initial European trading hours. The cross moves in a very narrow trade band with no meaningful traction.
At the time of writing, GBP/JPY trades at 155.77, up 0.08% for the day.
GBP/JPY 4-hour chart
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On the 4-hour chart, the GBP/JPY cross-currency pair has been consolidating near the upper downward sloping line of the channel. The bullish flag formation justified the rise in price from the lows of 153.85 on May 27. However, now the GBP/JPY price fluctuates inside the descending channel.
If price breaks and sustained below the session’s low, then it could be further corrected up to the 20-hour Simple Moving Average (SMA) at 155.60 .
The receding Moving Average Convergence Divergence (MACD) indicator offers potential for more downside toward the 155.40 horizontal support level followed by another support area at the 155.00 horizontal support level.
Alternatively, if price breaks the downward trendline of the channel, then it could continue with its prevailing upside trend. The first area of attack for GBP/JPY bulls would be the May 28 high at 156.05.
The price action would then target the levels last seen in 2016. The first on GBP/JPY bull's radar would be February 2018 high at 156.61 followed by June 2016 high at 160.67.