GBPJPY opened the month on a bearish tone as prices trade at a 6-week low.
An ascending channel created from March has seen a test at the upper region. However, since then a bearish divergence on the momentum indicator has triggered a move towards 38.2% of the 124.03/142.71 Fibonacci leg.
Weak demand for the pound has seen a break at the lower channel as we eye the next tests at 50% and 61.8%. We wait on the momentum indicators for further clues of a false break and another move towards the median regression area.
The 4-hour chart highlights the bearish bias which has driven prices to the 136 area.
The current price is now acting as a support to a previous resistance level at 136.69. The bearish divergence on the momentum indicator triggered a downside move starting at the median regression to the lower ascending channel.
A bounce at this support could see prices rise towards 38.2% of the 136.69/142.71 Fibonacci leg. Further upside could see the 50% and 61.8% brought into play and then a further test to recent highs.