GBP/JPY Price Analysis: Set-up remains tilted in favour of bearish traders

• GBP/JPY remains confined in a narrow trading band around 4-1/2 month lows.
• Bears await a sustained break below 200-DMA/61.8% Fibo. confluence support.

The GBP/JPY cross extended its sideways consolidative price action and remained confined in a three-day-old trading range, below mid-137.00s, or near 4-1/2 month lows set on Tuesday.

The pair's inability to register any meaningful recovery from an important confluence support near the 137.00 mark suggests that the recent bearish pressure might still be far from being over.

The mentioned region comprises of the very important 200-day SMA and 61.8% Fibonacci level of the 130.43-147.93 move up, which should act as a key pivotal point for short-term traders.

However, oversold conditions on the daily chart seemed to be the only factor holding investors from placing any aggressive bearish bets and helped limit deeper losses, at least for now.

Hence, it will be prudent to wait for some strong follow-through selling below the said confluence support before positioning for any further near-term depreciating move.

Sustained weakness below the 136.60-55 region will reinforce the bearish bias, which might turn the cross vulnerable to accelerate the slide towards the 136.00 round-figure mark.

The momentum could further get extended towards the next major support near the 135.30-25 region amid persistent uncertainty about the future UK-EU trade relationship.

GBP/JPY daily chart

Technical levels to watch