GBPJPY’s 3-month high at 137.39 suggests that prices could extend higher. Having retraced back below the 61.80% Fibonacci at 136.95, however, marks the bullish attempt as a false-break for the time being. This means that a pullback can be expected.
The pair is currently trading in the upper regression zone, biased to the upside. That follows a successful break of the median regression line.
Unless we see a break back into the lower zone, we can expect the prices to accelerate higher without a meaningful retracement. A bearish break, however, is more likely, from a price action perspective.
Prices flirt with the short-term median regression line as we speak. A break is expected to reach the medium-term median regression line and then slide lower if bulls allow. This can occur after a bounce or straight through.
The RSI (9) divergence indicates a bearish signal, supporting the narrative.
In case bears follow through, we can expect the pair to weaken towards the 134.50 region. This is a confluence area where the bearish 50% and bullish 38.2% Fibonaccis meet.
Depending on the rate of the decline over time, we could also see prices bounce off of the lower regression zone whilst the pair reaches the said confluence level.
Note that a break above the recent 3-month high, however, could invalidate the whole scenario.