Forex Technical Update August 3, 2010
Anticipating Support for GBP/JPY
- 1H: The market stopped the GBP/JPY rally at the 137.60 level. Although the near-term bias is bearish, the previous GBP/JPY update noted the bullish outlook in the short and intermediate term.
- Therefore, treating the current decline as a retracement, we can look for support using the fibonacci study.
- An important level or zone is between the 38.2% and 50% retracement. To me, the market should not break below 135.50 (61.8%). However, I believe the market should turn earlier around the 136.20(between 38.2% and 50%) level or even higher.
- The first level I will be monitoring for support is 136.40, giving it elbow room all the way down to 135.50.
- This means a logical stop placement may be below the 135.50, 61.8% retracement level, but what about the SMA 200? That may also provide support, but if the 61.8% retracement is broke, it may just be support in a ranging market.
- Also, the RSI should stay above 40. One thing I don't like is that the RSI did not break above 70. That shows me the rally since Friday has been weak, even though it did break above a previous high.
- Following up with the previous update, the target remains 140 or possibly a bit higher.
Commodity Trading Advisor
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