GBPJPY Analysis The GBP/JPY pair has shown significant signs of recovery since the start of the rally on April 9. At that time, the GBP/JPY pair reached the key support level at 184.40. This support level served as a foundation for strong momentum and sparked a sustained uptrend that has continued in recent weeks. Anti-tax sentiment strengthened again, especially after the GBP/JPY pair broke through the 193.70 resistance level. The acquisition tax signaled strong conviction in higher prices, but it saw a significant psychological and technical decline just below 196.00. This support line acted as a strong barrier, interrupting the recent upward momentum and causing the GBP/JPY pair to slightly cross over. Despite these minor declines, the GBP/JPY pair remains above the ascending trend line that began at the low point on April 9, indicating that the short-term bullish structure is a positive sign for further upside. However, it is equally important to recognize that the broader market context continues to reflect a longer-term crossover, restricting most of the price action since July. This long-term zone has formed a clear boundary, limiting upward momentum around the 199.50 area while providing solid support in the 184.40-188.00 area. As long as the currency pair continues to trade within this range, traders should be aware that a final trend breakout has yet to be confirmed. From a technical analysis perspective, momentum indicators are favoring the bulls. The Relative Strength Index (RSI) is witnessing a steady rebound from its midpoint near the 50 level and is currently close to the 70 buy line. This indicates strengthening bullish momentum, but there is also the potential for a short-term decline or crossover if overbought conditions occur. Meanwhile, the MACD indicator is also showing positive signs. The MACD is firmly above both its signal line and zero line, indicating positive momentum in the current trend and underlying strength. All these indicators reflect a bullish bias, suggesting that, barring any significant changes in sentiment or fundamentals, the uptrend is likely to continue in the near term. If the strong momentum is maintained and buyers are able to break above 196.00, it could pave the way for a retest near the January 7 high of 198.35. This price range adds psychological weight and can act as a magnet for strong positions. A sustained break above this price range would likely reinforce the acquisition tax and open the way for a price test near the top of the established price range at 199.50. A break above this price level would be a significant breakout and could signal the beginning of a more pronounced uptrend and encourage a more positive shift in market sentiment. Conversely, if the market is unable to maintain the current upward momentum, a correction could occur. A downward correction of the short-term ascending trend line could serve as an early warning sign that bulls are losing control. In these scenarios, the primary area of concern regarding the negative tax would be the 190.30 support line. In the event of a convincing downward break above this level, the pair could see a deeper correction towards the 188.00 support level. This support line has consistently acted as the lower boundary of the entire trading range. If the downward pressure intensifies further and this key support level is breached, attention is likely to shift to the 184.40 level, which recently triggered the recovery tax. A decline below this level would not only signal a complete reversal of the recent rally but could also tilt the medium-term outlook more to the downside. In a broader context, the currency pair's position within a certain crossover range suggests that traders should approach it with a degree of caution, especially when assessing the possibility of a trend-defining breakout. The longer the currency pair remains within this range, the more significant the bullish or bearish breakouts become, if they do occur. However, short-term trends currently remain in favor of strong momentum, supported by positive momentum signals and the successful defense of the ascending trend line. However, until the GBP/JPY pair secures a strong close above 199.50 or a strong decline below 184.40, it is best to view the longer-term outlook from a neutral perspective. In conclusion, the GBP/JPY pair has demonstrated a steady recovery trend since early April, and technical indicators support the possibility of a short-term uptrend. Whether the GBP/JPY pair can maintain its upward trend will depend on whether it can break above key resistance levels such as 196.00 and eventually 198.35. Until then, short-term investors may be able to find opportunities in current strength, but the broader convergence will remain intact.
