Bulls looking to build on momentum beyond 136.00 mark

A combination of factors assisted GBP/JPY to gain traction for the fifth consecutive session.
The technical set-up favours bullish traders and supports prospects for additional gains.
Dip-buying should help limit any meaningful slide near the key 135.00 psychological mark.

The GBP/JPY cross regained positive traction for the fifth consecutive session on Tuesday and moved back closer to two-week tops touched in the previous session. Bulls were now seen making a fresh attempt to build on the momentum beyond the 136.00 mark.

The cross on Monday broke through the 200-hour SMA for the first time in three-week. A subsequent move beyond the 23.6% Fibonacci level of the 142.72-133.05 recent pullback, along with the emergence of some dip-buying on Tuesday, favours bullish traders.

The bullish set-up is reinforced by the fact that oscillators on hourly charts have been gaining traction in the positive territory. Some follow-through buying beyond the overnight swing high, around the 136.20-25 area, will add credence to the constructive outlook.

The GBP/JPY cross might then aim to test the 38.2% Fibo. level resistance near the 136.80 region. The latter coincides with the very important 200-day SMA, which if cleared decisively should pave the way for an extension of the recent bounce from the 133.00 mark.

On the flip side, the 135.35-30 region (23.6% Fibo. level) now seems to have emerged as immediate strong support. Any further slide will now be seen as a buying opportunity and remain limited near the key 135.00 psychological mark amid the latest Brexit optimism.

That said, failure to defend the mentioned support levels might turn the GBP/JPY cross vulnerable to slide back to the 134.60-50 horizontal support. The downward trajectory could then drag the cross back towards multi-month lows touched on September 22nd.