GBPJPY Proceeds Higher After Bullish Doji

Technical analysis of Forex market

GBPJPY is pushing for another green day, justifying the bullish dragonfly doji candlestick formed on Tuesday following the bounce on the 4 ½-month low of 148.45 and the 23.6% Fibonacci retracement of the March 2020 – May 2021 upleg.

While the bearish cross between the 20- and 50-day simple moving averages (SMAs) is dashing hopes for a trend improvement in the short-term picture, the soft recovery in the MACD and the upturn in the RSI raise expectations that positive momentum could persist. Yet, some caution is still required as the former has yet to cross above its red signal line and the latter continues to fluctuate below its 50 neutral mark.

Looking for resistance levels, the blue Kijun-sen line at 151.79 and the 20-day SMA at 152.27 may prevent the price from touching the 50-day SMA at 153.67. Higher, a break above the 155.14 barrier would shift the spotlight straight to the 156.03 peak, where any violation may prompt a new bullish round towards the 158.00 mark and the long-term resistance line.

Alternatively, a downside reversal may initially pause around 149.50 before heading again for the 23.6% Fibonacci and the 148.45 low. Slightly beneath, a tougher battle could take place near the long-term ascending trendline drawn from the 2020 bottom and the 200-day SMA currently at 146.90. Should sellers gain more ground, the next rebound could occur around 146.25.

In brief, the technical picture suggests GBPJPY could extend its recovery within the short-term bearish trajectory, with the confirmation likely coming above 152.27.