GBP/JPY Daily Chart 10/25/2012 3:00PM EDT
Bullish momentum: The GBP/JPY is continuing a rally that started at 118.83, held roughly in a rising channel since than. The RSI has tagged 70, held above 40 and is again about to kiss 70, reflecting bullish momentum. The use of the 200-day SMA (roughly) as a support is a slingshot, suggesting the further bullish action that is already taking place. Today’s (10/25) price action extends the rally toward the 130.00 handle.
Resistance: 130.00 is a psychological barrier as well as a previous support/resistance pivot. It was resistance in the beginning of March 2011. After it was broken, it supported a consolidation through March but broker early April. The area around 130 was treated as a pivot for a couple of times after that as well.
Trendline: On top of these resistance factors, the key one is the falling trendline from a 2012 resistance pivot near 145.75 as seen in the weekly chart below. This means that the 130.00 will be a key resistance, and also means that a break is a major step in the bullish scenario. The RSI in this time-frame kissed 70 earlier this year and held above 40 after a sharp retracement, but is now at 60. A break above 60 should reflect bullish continuation.
Targets: The short-term targets to the upside are 131.80/85 and 133.45/50 pivots, the latter one being the 2012-high. In the long term (as we are looking at the weekly chart), this also exposes the 140 handle/resistance pivot, and the aforementioned 145.75 pivot, and original of the yet-to-be-broken trendline. We are likely to have some more updates on GBP/JPY before the market can confirm further development toward these latter targets, so for now, the focus is around 130.00.
GBP/JPY Week Chart 10/25/2012
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.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.
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