Forex Technical Update August 2, 2010
GBP/JPY Continues After Impulse Wave Rally
- 4H: The GBP/JPY ended last week with a decline. This however came after a rally that signaled a short-term bullish outlook as it broke a congestion pattern in the daily chart. The weekly post has the latest update.
- If you recall, the choppiness index was telling us the market could be starting to trend. This week, the market also confirmed the bullish outlook after a throwback was supported above the 50% retracement mark, and the 50 and 200 period moving averages.
- The RSI also broke above 60 after failing to break below 40.
- If the bullish outlook is correct, we could have started a wave I, and completed II. This spells an intermediate term bullish mode. However, we will have some resistance to challenge this scenario soon.
- Daily: The daily chart also shows a reversal of momentum, failing to break below 40 on several attempts and now breaking above 60.
- However, we will be seeing a resistance zone between 138.60 and 140. This is a confluence of the SMA 200, declining trendline, and 61.8% retracement area. A break above 140 confirms the bullish outlook, and the next target would be the consolidation zone the market was at during April. (143.50 - 146 area).
- I would anticipate another throwback from there. To me, until the 146.00 level is broken, the market is at best ranging. At the moment, the market is bullish in the short-term, but the intermediate term outlook is still uncertain until the market shows us something as it tests the 138.60-140.00 zone.
- I will be monitoring these levels closely.
Commodity Trading Advisor
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