GBP/JPY: Price Corrects from 8.5 Year High

FXOpen

According to CNN, the economies of the UK and Japan entered a technical recession last week as data showed a second consecutive quarterly decline in gross domestic product. And if in the UK the economic downturn can be associated with high inflation and the strict policies of the Bank of England, then in Japan the reason may be the population decline (which has been going on for 14 years in a row).

At the same time, the GBP/JPY chart shows that last week the rate exceeded 190 yen per pound for the first time since August 2015.

However:
→ the price is at the upper border of the ascending channel (shown in blue);
→ at the beginning of this week, the price of GBP/JPY is below the 190 yen level – and a false bullish breakout of the psychological level should be regarded as a bearish sign;
→ the MACD indicator indicates that demand forces are fading.

Perhaps market participants are inclined to take profits from longs. Since it is possible that the Japanese authorities are able to announce some decisions aimed at supporting the yen. In this case, one of the immediate targets for the bears may be the level of 186 yen per pound – where the support level (formerly the resistance level) is located, reinforced by the median line of the long-term channel.

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