GBP/JPY at Risk of Head-and-Shoulders Formation

A head-and-shoulders may take shape in GBP/JPY if it struggles to retrace the decline from the September high (185.78).

GBP/JPY Outlook

GBP/JPY may no longer reflect the bullish trend from earlier this year amid the flattening slope in the 50-Day SMA (183.40), and failure to trade back above the moving average may curb the recent rebound in the exchange rate like the price action from last week.

A breach below the 179.40 (23.6% Fibonacci retracement) to 179.70 (61.8% Fibonacci extension) region raises the scope for a test the monthly low (178.10), with the next area of interest coming in around 177.20 (23.6% Fibonacci retracement).

Nevertheless, GBP/JPY may stage another attempt to trade back above the moving average as it retraces the decline from the monthly high (183.82), with a break/close above 183.90 (50% Fibonacci retracement) bringing the September high (185.78) on the radar as it negates the threat of a head-and-shoulders formation.