GBP/JPY recovers after 5-day slide

The pound is rising against the yen on Thursday after falling during the previous five trading days. GBP/JPY bottomed yesterday at 130.40, the lowest level in four weeks and now is hovering around 132.00.

The pair is bouncing from near a very strong support area: the 130.00 handle. The rebound could signal a potential short-term bottom. Price is now back above the 20-SMA in four-hour charts and pointing to the upside. On a wider perspective, if the yen breaks the 130.00 barrier and consolidates below it could open the doors for a major slide.

Risk appetite and the pound

Today GBP/JPY peaked at 132.16 and is gaining more than a hundred pips. The yen is falling in the market amid risk appetite after the Federal Reserve left interest rate unchanged yesterday. The pound is showing resilience and since the beginning of the American session, it has risen across the board.

Technical levels to watch

To the downside, support levels could be located at 131.95 (European session high), 130.50 (daily low), and 130.00 (psychological). On the opposite direction, resistance might be seen at 132.25/30 (daily high), 133.25 (Sep 23 high) and 133.45 (Sep 19 high).