GBP/JPY 1H Chart 7/9/2012 10:30AM EDT
The GBP/JPY has been bearish since forming a double top seen in the 4H chart. In the 1H chart, it has been held under a declining trendline that started July 3rd. Since then, the RSI has held under 60, and tagged 30, a sign of persistent bearish momentum developing. GBP/JPY ended last week pushing through a near-term consolidation support of 123.80, but found support after testing the 123.00 handle, giving way to a corrective rally so far back to 123.55.
The rally is still within the context of a bearish market, even above 123.55. If the market respects 123.80 and the declining trendline, we should have another test of the 122.85-123.00 support area. However, if the market extends the corrective rally higher, and breaks above 124.25 (200-hour SMA), and previous near-term consolidation resistance, the bearish outlook might need to be shelved for consideration of a bullish outlook, at least opening up highs near the 125.40 level, and maybe the 125.80 June-high.
As far as the RSI, it should not break above 60 if the bearish momentum is to be maintained.
In the bearish continuation however, a break below 122.80 opens up the next support pivot area between 121.85 and 122 in the near-term. Below that, we open up the 2012 low around 118.75.
GBP/JPY 4H Chart 7/9/2012 10:35AM EDT
Fan Yang CMT is a trader, educator and a Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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