GBP/JPY is capped by a declining trend line. The technical picture of GBP/JPY is bearish below a descending trend line, which emerged on Oct 19. The declining 50-period moving average suggests that the pair still has potential for a further drop. Additionally, the relative strength index is below its neutrality level at 50 and lacks upward momentum. As long as 127.30 holds on the upside, look for a further drop toward 125.90. A break below this level would call for a further decline toward 125.25.

The pair is trading below its pivot point. It is likely to trade in a lower range as long as it remains below the pivot point. Short positions are recommended with the first target at 125.90. A break below this target will move the pair further downwards to 125.25. The pivot point stands at 127.30. In case the price moves in the opposite direction and bounces back from the support level, it will move above its pivot point. It is likely to move further to the upside. According to that scenario, long positions are recommended with the first target at 127.60 and the second one at 127.90.

Resistance levels: 127.60, 127.90, 128.70

Support levels: 125.90, 125.25, 124.15