GBP/JPY Price Analysis: Bulls and bears battle around the 161.70 area as a doji emerges

• GBP/JPY seesaws around the 161.70 area, failing to reach the head-and-shoulders 161.00 target.
• The GBP/JPY 1-hour chart portrays that the head-and-shoulders is still in play, so bears are pilling around further GBP/JPY rallies.

The GBP/JPY is trading almost flat during the Asian Pacific session after Monday’s price action formed a doji, meaning that neither buyers nor sellers are in control. On Tuesday, the AUD/JPY is trading at 161.76, up by 0.03%.

GBP/JPY Price Analysis: Technical outlook

The daily chart is neutral-to-downward biased, with the exchange rate below the 20, 50, and 100-day EMAs. GBP/JPY traders should be aware that price action formed a successive series of lower highs and lows for four consecutive days, sliding steadily. However, the average daily range (ADR) shrank to 110-130 pips a day, meaning that the pair is about to see high volatility levels, which could send the pair towards the 200-day EMA at 158.93.

The GBP/JPY on the hourly scale had not fulfilled the head-and-shoulders target of 161.00, falling short on Monday, when it reached the 161.15 daily low. Since then, the cross bounced off towards the 161.70 area, where the 20-hour EMA lies, in confluence with the daily pivot point. Therefore, a break above will expose the GBP/JPY to higher prices, which is not likely to happen due to the Relative Strength Index (RSI) being in negative territory with a 47.22 reading, aiming lower.

Therefore, the GBP/JPY path of least resistance is downwards, and its first support would be the August 22 low at 161.15. The break below will expose the head-and-shoulders target at 161.00, followed by the S2 daily pivot at 160.43, followed by the August 15 daily low at 160.08.

GBP/JPY Key Technical Levels