GBP/JPY Continues the Correction Aiming for the Crucial Support (158)

The depreciation of the Japanese currency was seen on almost all fronts and its scale was, for many people, really surprising. The last few days of March bring us a correction of this movement though. The Yen is gaining strength but at this point, it’s hard to consider it as something more than a simple correction.

Technical Movements on the GBP/JPY

As an example, we’ll use the GBPJPY, which is loved by retail traders thanks to its volatility. The gamechanger here happened on March 22nd, when the price broke the crucial horizontal resistance on the 158 (green). The movement was very decisive and allowed for the creation of a firm white candle. The bullish bonanza lasted until March 28th, when the price managed to set the local high slightly below the 165. Today the GBPJPY has created a shooting star candle, a formation with a long head and a smaller body on the bottom. That candle has a green light for a bearish correction, which we’re experiencing now.

How Deep Can This Correction Go?

The first target was already reached and it’s the 38,2% Fibonacci. I have a feeling that it won’t be what all sellers are pushing for. The ultimate goal should be the horizontal support on the 158 (green), mentioned above. Movement towards this area would be welcomed from the technical point of view as the broken resistances are very often tested as supports. And this price action is still missing here.

Long story short, the long-term sentiment remains positive but in the short-term we see a chance for a further drop.

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