GBP/JPY 4H Chart: Channel Down

GBP/JPY has recently topped out and is now undergoing a bearish correction that has developed into a bearish channel. Being that at the moment the currency pair is trading near the upper boundary of the downward-sloping corridor, the Sterling is likely to underperform and fall beneath the 200-period SMA at 170.20 and then move en route to the lower down-trend at 167.49, which is reinforced by the weekly S3 level.

However, a half of SWFX market participants doubt that the Pound will depreciate—they are holding long positions. Moreover, four-hour and weekly indicators are bullish, suggesting this retracement is not going to extend much deeper.