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Overview
As it was expected yesterday, the breakdown of the support level 119.60 resulted in strong upward movement. Today the GBP/JPY pair is trading in a slight upward movement and slightly downside correction reaching the support level 119.60 again. Considering today's H4 chart, if the pair is able to break the upward trend line, then the support area 119.60 -119.00 may act as a strong indicator for downward trend enabling to reach the support level 118.50.
On the other hand, the rebound from the support area and reversal to the downward movement can lead to testing the strong resistance level 121.10. If the pair is able to break through the resistance level and close above 4H, this will indicate the purchasers strength and a good opportunity to buy. Then it is necessary to wait the price reaching the resistance level 122.60. In case this level is passed through, the new buyers signals will be provided with 123.32 level seen as target. Technical indicators provide bullish signal but as long as the resistance level 121.10 is unbroken, the downward trend is still possible. Therefore we should wait more confirmations before making the decision.
Resistance and Support levels
R3(123.50)
R2(122.60)
R1(121.00)
S1(119.60)
S2(119.00)
S3(118.50)
Trading Recommendations
According to the prevous analysis, we recommend buy-deals when the resistance level 121.10 is passed through with TP1 122.45 and TP2 123.15 , SL 4H closure below 121.10 level .