Investors have initially seen signals for a change in price direction on the chart of the GBP/JPY currency pair earlier this week.
The price has shown a bullish pattern thus ending the bearish movement of the previous week after the price plunge from the height of 172.00.
The price that dropped to around 165.200 at the end of last week has finally shown a rebound at the beginning of this week reaching 169.00.
The Pound failed to sustain the strengthening as it traded weaker against the Yen on Wednesday yesterday. Investors start to be cautious ahead of the release of UK economic growth data?
If examined, the gross domestic product (GDP) data that will be published is expected to record a weak reading. This is likely to make it difficult for the central bank to continue tightening monetary policy.
On Wednesday yesterday, the price on the GBP/JPY chart which made a dive from the 168.00 level has shown movement below the Moving Average 50 (MA50) barrier signaling a bearish trend change again.
After failing to extend the uptrend at the start of the week, prices fell to 166,200 at the end of yesterday's New York session before there was a slow bounce in prices in trading continuing into the Asian session on Thursday morning.
If the price continues to drop lower, the support zone at 165.00 will return to focus to be tested again this week after 4 weeks of the price being above the zone.
An extended lower decline is expected to potentially reach around 162.00.
However, if the price manages to bounce back towards the end of this week's trade, the resistance at 168.00 will be tested before the price breaking the MA50 barrier will be an early signal of a bullish trend change.
And if the price manages to resume the increase at the beginning of the week, it is possible that the high reached at 169.00 this week can be overcome before recording the latest high.
The next target is to get back to the resistance level at the height of 172.00 which was reached at the beginning of last week.
