GBP/JPY Price Analysis: To extend its rally, as a dragonfly doji emerges around 160.50

• Dragonfly doji surfaced as the GBP/JPY recovered from weekly lows around the mid-159/160 mark.
• GBP/JPY Price Analysis: Neutral to downward biased, but in the short term, it could test the 200-DMA.

The GBP/JPY is almost unchanged as the Asian session kicks in, though Wednesday’s session witnessed the cross falling to new weekly lows of 159.50. However, the GBP/JPY pair staged a comeback and formed a dragonfly doji, which suggests bulls are moving in. The GBP/JPY is trading at 160.50 at the time of writing.

GBP/JPY Price Analysis: Technical outlook

From a daily timeframe perspective, the GBP/JPY is still neutral-to-downward biased, with the exchange rate remaining below the trend-setter 200-day Exponential Moving Average (EMA) at 162.14, which is also above the 50-day EMA at 161.74. For the GBP/JPY to continue its downtrend, it would need to crack the 20-day EMA at 160.05, and then, the pair may pose a threat to break below the weekly low of 159.50.

As an alternate scenario, for the GBP/JPY bullish continuation, the pair needs to reclaim the psychological 161.00 figure. Break above will expose the 50-day EMA, followed by the 162.00 mark. Once broken, the bulls could challenge the 200-day EMA at 162.14.

GBP/JPY Key Technical Levels