March 25, 2022 8:50:40
Yen crosses have been in focus this week. Weakness in JPY has seen some pairs make new record straight day gains and multi-year highs, especially against the commodity currencies. GBP/JPY has also posted a new top not seen since May 2016, just before the Brexit vote and the collapse in the pound.
We wrote ten days ago about the potential upside for this cross after the “false break” lower at the start of the month. Sellers had taken prices below a long-term support trendline around 152.
But buyers quickly stepped in and pushed the pair above the January low and the 200-day SMA around 153. Prices have moved sharply higher over the last week moving above the 50-day SMA at 155.39 and a prior significant top at 156.06.
A key resistance zone which had capped prices on several occasions previously around 158 was swiftly broken. This bullish move on Tuesday also saw the pair move through a very long-term resistance trendline at 158.01.
However, prices were overbought on several indicators including the daily RSI above 70 and through the upper Keltner band. Today’s high at 161.49 looks like a near-term top. Support comes in at 160.23 and then around 159. Dips around here should be well supported with the 158 support zone below.
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