GBP/JPY Closing in on Projection

• 4H: The Yen has been strong lately, and the GBP/JPY has been one of the weakest yen crosses. (Refer to Daily Video Technical Update 2.26.2010).
• Looking at the 4H time-frame the market looks to be in a very strong decline to start the week but has been supported above the 132.50 level and consolidating in a very narrow range of about 100 pips.
• Looking at such a sharp decline, there might not be a strong correction but more likely one of 23.6% or 38.2% retracement.
• Daily and Weekly: The daily chart shows the market closing in on a short-term projection to just above the 131.00 area. The market is at the 161.8% extended retracement of the rally, which means, the channel breakout projection has not been reached (only 61.8% complete).
• We can see that the technical picture is very bearish, even if there is a near-term pause, which we are seeing more clearly in the 4H tie-frame.
• The weekly chart shows that further decline is likely to a more significant support level at the 200% extended retracement (128-129), which is the channel breakout projection.
• This is also a 100% swing projection and a 78.6% retracement.
• So look for some near-term support in the 4H time-frame, but when stochastic is no longer oversold and is turning bearish, get ready for continuation towards the 129.00 area.
• Stalk the current consolidation in 4H time-frame to look for confirmation for this outlook (ie. topping and strong bearish action, break of a rising trendline.)

Fan Yang
Currency Analyst
Commodity Trading Advisor

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