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GBP/JPY Price Analysis: Double Top strengthens bearish reversal; 164.00 targeted
A Double Top pattern indicates fatigue in the upswing following an extended run. The RSI (14) has detected resistance at 60.00, indicating that the pound bulls are no longer bullish. The yen bulls are seeking to drive the asset below the 50-day exponential moving average (EMA) around 167.50.
In the late New York trading session, the GBP/JPY pair broke to the negative from its consolidation between 167.90 and 168.07. Earlier, the asset had a sharp decline after failing to surpass its six-year high of 168.73.
The appearance of a Double Top chart pattern following a sustained hourly rally implies that the uptrend is tiring. This also suggests a bearish reversal, but a bearish reversal seeks further downward filters. The asset was sold off as it attempted to surpass the six-year high of 168.73. It appears that a feeble effort by the pound bulls is responsible for the loss of upward momentum.
The cross has breached the 20-period Exponential Moving Average (EMA) at 167.81 and is aiming for a fall below the 50-period EMA at 167.50.
The Relative Strength Index (RSI) (14) demonstrated a sharp decline as its range dropped below 60.00-80.00. In addition, the momentum oscillator has detected resistance around 60.00, which indicates that market players are no longer optimistic on the cross.
A more decisive decline below Thursday's low of 166.69 will trigger the Double Top pattern and ignite the yen bulls for a decline towards Monday's high of 165.67. If the latter is breached, the cross will go towards the round-level support at 164.00.
Alternatively, pound bulls might reclaim control if the cross surpasses 167.83, a six-year high. This will drive the asset towards the high of 170.63 from February 8, 2016, followed by the low of 174.88 from April 13, 2015.
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