GBP/JPY Selloff Pushes RSI Toward Oversold Territory

GBP/JPY approaches the October low (178.10) as it marks a five-day selloff for the first time since July.

GBP/JPY Outlook

GBP/JPY appears to have reversed course following the failed attempts to test the November 2015 high (188.81), with the exchange rate extending the decline from the start of December to register a fresh monthly low (178.59).

The sharp depreciation in GBP/JPY has pushed the Relative Strength Index (RSI) towards oversold territory, with a move below 30 in the oscillator likely to be accompanied by a further decline in the exchange rate like the price action from last year.

A breach below the October low (178.10) opens up the 175.90 (38.2% Fibonacci retracement) to 177.20 (23.6% Fibonacci retracement) region, which includes the July low (176.33), with the next area of interest coming in around the June low (172.67).

However, failure to close below the 179.70 (61.8% Fibonacci extension) to 180.80 (23.6% Fibonacci retracement) zone may curb the bearish price action in GBP/JPY, with a move above the 183.90 (50% Fibonacci retracement) to 184.80 (23.6% Fibonacci extension) area bringing 186.60 (50% Fibonacci extension) on the radar.