Forex Technical Update GBP/JPY Completes Topping Action; Tests Support

By IBTimes Staff Reporter | June 22 2010 9:10 AM

Forex Technical Update June 22, 2010 GBP/JPY Completes Topping Action; Tests Support

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Daily: The GBP/JPY has shown that topping action may be complete. The RSI confirms with a crossover under its 5-period moving average.
The negative reversal suggests an aggressive target of 123. However, in the short-term, the 130.45 area is the target. This is 61.8% retracement, and is also the target for the latter part of the negative reversal.
A break below 130.45 would suggests further decline to 123, but with another test at 126.70.
Taking a look at the 4H and 1H chart allows to check the internals for confirmation.

The 4H chart shows that the momentum has not been strong enough. The RSI still remains above 40, for now. The market is also testing a rising support. The bullish outlooks stemming from an earlier positive reversal signal is now being challenged. The market is very choppy, and bearish, so the bullish outlook did not develop fully as the underlying market conditions are still bearish in the intermediate term.

The 1H chart shows that the market did break below a support area, completing topping action, and is now showing some pullback. The moving averages are crossing, another bearish sign.

I am looking for a pullback that may test the 38.2% retracement area near 134.20. This is also the area of the previous 2 consolidations on June 18/20, then again June 21/22.

Topping action here, suggests the market is on its way to 130.45. Then next target after that is 127.60. If that breaks, the market may continue lower to 123.

Fan Yang Currency Analyst Commodity Trading Advisor

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