GBP/JPY Price Analysis: Sideways around 160.50s after breaking below a technical confluence area

• GBP/JPY registered a bearish engulfing candle pattern but jumped off the weekly lows below 160.00.
• If the pair aims upwards, the GBP/JPY will face solid resistance around 161.70-90.
• Conversely, a GBP/JPY’s fall below 160.00 could pave the way toward 159.00.

GBP/JPY collapsed on Wednesday and lost 1.43% due to a deterioration in market sentiment, sponsored by fears of a banking contagion after regulators seized two US banks. In the Europan session, Credit Suisse (CS) sell-off sent its CDS skyrocketing as odds for a default increased. However, Swiss authorities stepped in and cushioned the bank’s fall. Therefore, the GBP/JPY exchanges hands at 160.50, gaining a minuscule 0.03% in the Asian session.

GBP/JPY Price action

After consolidating around the confluence of the 20, 50, 100, and 200-day Exponential Moving Averages (EMAs), the GBP/JPY distance from them, and edged towards a fresh 4-week low at 159.20. However, the GBP/JPY gained some traction late in the session and closed the day at 160.77.

Oscillators like the Relative Strength Index (RSI) are in bearish territory. However, the Rate of Change (RoC), showed that selling pressure eased toward the end of the trading day. Therefore, the path of least resistance is sideways.

Upwards, the GBP/JPY first resistance would be the 161.00 figure. Once the pair surges above that area, the confluence of the daily EMAs would be exposed, led by the 50 and 200-day EMAs, each at 161.75 and 161.94, respectively. Once cleared, the next stop would be the 20-day EMA at 162.00.

For a bearish continuation, the GBP/JPY needs to clear the March 13 low at 160.04 before posing a threat at the March 15 low at 159.20. Below that area looms the 159.00 figure.

GBP/JPY Daily chart

GBP/JPY Technical levels