GBP/JPY plummets from 8½-year high

GBP/JPY is retreating after the pullback off the eight-and-a-half-year high of 193.55 and is moving towards the short-term ascending trend line.

According to technical oscillators, the RSI is heading south following the strong rally until the 70 level, while the MACD is losing some steam above its trigger and zero lines, both confirming the recent bearish correction.

If the bears hold control, then the pair could touch the 190.00 critical level, which coincides with the 20-day simple moving average (SMA) and the uptrend line. A rebound is expected around these lines, but in the case of steeper decreases the price could see the market testing the 50-day SMA at 189.10 ahead of the 188.00 handle.

However, an upside recovery could take the market towards the previous multi-year peak of 193.55 before resting near the 161.8% Fibonacci extension level of the downward wave from 188.65 to 178.80 at 194.80. More upside pressures could see the bulls meeting the June 2015 high at 195.90.

To conclude, GBP/JPY is looking bullish in all timeframes and caution should be taken if there is a plunge beneath the 200-day SMA at 184.70 that may switch the short-term outlook to a more neutral one.