(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; downtrend lines in red; chart patterns in yellow; 50-period simple moving average in light blue.)
4/10/2008 GBP/JPY Much like with other sterling crosses, the British Pound in the GBP/JPY daily chart, as shown, has essentially been taking a one-way path down since mid-2007. And also like other sterling crosses, this steep downtrend has been interspersed with consolidations in the form of triangles, pennants, and flags (as represented on the chart by the yellow patterns). Concurrent with these falling continuation patterns is a relatively precise downtrend resistance line (in red) that was just touched and respected for the fourth time late last week and early this week. A prompt bounce back down with follow-through then occurred on Tuesday. This bounce down off resistance coincides with the formation of yet another consolidation pattern, this time in the shape of an inverted flag. As of this writing, price has poked through the bottom of the flag, but has not yet shown a bonafide breakdown. If a true breakdown with momentum indeed occurs, the next major support to the downside resides in the region of the last long-term low of around 192.50, which is also the lowest point of the current inverted flag. As a side note, oscillators like the displayed Stochastics, which have moved down sharply from overbought, are lending some confirmation to the down-move from the red downtrend resistance line.
Chief Technical Analyst
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