The price movement on the chart of the GBP/JPY currency pair has ended a series of price increases a few days after investors saw a significant decline in prices yesterday.
After a gloomy reading of UK manufacturing and services PMI data published in the European session yesterday, the negative reaction of investors has prompted the Pound to depreciate despite having started trading early in the week well.
In addition, the Yen strengthened slightly after the recovery in market sentiment was previously seen to be more limited as investors examined indicators on the stock market where the reading of the main Wall Street index returned ‘red’.
This is to some extent seen as an additional factor for the bearish movement on the GBP/JPY chart since yesterday.
The re -decline below the Moving Average 50 (MA50) barrier level in the 1 -hour time frame also gives an early signal of a bearish trend change.
The decline in the European session that continued to the New York session has reached a level of around 158.00, closing the gains made during the price increase since the opening of trading earlier in the week.
Prices however showed a slight increase in a slow tempo from the end of the New York session until continuing into the beginning of the European session this afternoon.
If the price fails to break the MA50 barrier, the decline is expected to resume towards the RBS zone (resistance become support) at 157.700.
A lower decline to continue the bearish movement will push the price towards the support zone at 156.00 which was the focus of last May 12 trading.
However, if the price manages to bounce back past the MA50 barrier and then give an indication to continue the previously displayed rise, the weekly high level at 161.00 will be challenged.
Successfully overcoming that level will push the price towards the resistance zone at 162.00 which was also tested in early trading last week.
