Brexit Update GBPJPY faces further downside pressure

Short-term technical outlook on GBP/JPY (Tues 11 Nov)

Key elements

• Prior to the hard Brexit deal parliamentary vote that has been intended to take place on Tues, 11 Dec 2018, the GBP/JPY cross pair has continued within a minor bearish ascending channel in place since 08 Nov 2018 high.
• Yesterday (10 Dec) it has staged a bearish breakdown from a minor “Descending Triangle” range configuration reinforced by U.K PM May decision to cancel today parliamentary vote which increases the risk of a chaotic withdrawal process from European Union as the exit deadline looms on 29 Mar 2019. The key short-term resistance to watch will be at 143.40 which is defined by the pull-back resistance of the former minor “Descending Triangle” range support and 23.6% Fibonacci retracement of the on-going decline from 08 Nov 2018 high to yesterday, 10 Dec low of 141.15.
• Medium-term downside momentum remains bearish as the daily RSI oscillator has not flashed any bullish divergence signal and still has further room to manoeuvre to the downside before it reaches an extreme oversold level at 21.
• In the shorter-term, the cross pair may stage a minor bounce first to retrace yesterday, 10 Dec steep decline of 250 pips, the worst performance since 15 Nov 2018 as the shorter-term hourly Stochastic oscillator has flashed a bullish divergence signa at its oversold region and still has room for further potential upside before it reaches an extreme overbought level.
• The next significant short-term support rests at the 140.50/30 zone which is defined by the lower boundary of the minor descending channel from 08 Nov 2018 high and a Fibonacci projection cluster (see 1 hour chart).         

Key Levels (1 to 3 days)

Intermediate resistance: 142.80

Pivot (key resistance): 143.40

Supports: 141.15 & 140.50/30

Next resistance: 144.80/145.00

Conclusion

The minor downtrend remains intact for the GBP/JPY. If the 143.40 key short-term pivotal resistance is not surpassed, the pair is likely to shape another potential impulsive downleg to retest yesterday, 10 Dec low of 141.15 before targeting the next significant short-term/minor support at 140.50/30.

However, a clearance above 143.40 put the bears on hold for an extension of the corrective rebound towards the next resistance at 144.80/145.00 (the pull-back resistance of the former ascending support from 15 Aug 2018 low & minor swing high area of 04 Dec 2018).  

Charts are from eSignal