GBP/JPY Price Analysis: Rising wedge in the daily paves the way for a pullback

• The GBP/JPY plunges from YTD highs above 172.00 as traders brace for the Federal Reserve’s monetary policy decision.
• From a technical perspective, the GBP/JPY remains upward biased, but a downward correction looms.
• Short term, the GBP/JPY Is neutral-to-downward biased eyeing a break below the 200-EMA at 169.47

The GBP/JPY retraces from YTD highs at 172.13 and tumbles for the second-straight day due to a risk-off impulse, but also traders booking profits in the GBP/USD ahead of the Federal Reserve’s policy decision on Wednesday. Hence, the GBP/JPY is trading at 170.09, below its opening price by 0.19%.

GBP/JPY Price Analysis: Technical outlook

From a daily chart perspective, the GBP/JPY remains upward biased, even though a rising wedge is forming, nearby meaning that GBP/JPY risks are skewed to the downside. If the bearish rising wedge is confirmed, a test of the 200-day Exponential Moving Average (EMA) is on the cards at around 161.58. Otherwise, the GBP/JPY would consolidate in the 169.00-172.00 range, awaiting a fresh catalyst.

The Relative Strength Index (RSI) at bullish territory further confirms the latter. Nevertheless, market sentiment deterioration or if the Bank of England’s  (BoE) monetary policy decision disappoints investors, the GBP/JPY might extend its losses below 170.00.

The GBP/JPY hourly chart depicts a neutral-to-bearish biased pair. The EMAs lie above the spot price, except for the 200-EMA at 169.47, the last piece of the domino keeping the GBP/JPY from sliding further. The RSI is at bearish territory, with a downward slope, warranting that sellers are in charge.

Hence, the GBP/JP First support would be the 200-EMA at 169.47, the S2 daily pivot at 169.15, and the 169.00 figure, the October 25 low at 167.83, and the October 24 daily low at 167.58.

GBP/JPY Key Technical Levels