Simple Moving Average(SMA) 50-period (red), 200-period (bold, gray)
RSI-14 with Simple Moving Average 5-period of RSI attached.

Fibonacci Study
Elliott Wave Principles
Market and Price Action (patterns, candlesticks)
Intraday pivots and Intermediate-term support and resistance

- The 4H chart above shows the market breaking below a medium term channel support, while the daily chart below shows the test of a longer term channel resistance.
- The short-term outlook is now bearish, with a decline materializing after a a bearish divergence.
- The 130.50 area look to provide minor support, and below that the 129.80 area is an even stronger support with your 200SMA in the 4H chart, as well as a confluence of 61.8% and 38.2% retracement.
- The bearish action however is not very convincing at the moment. The candles are no stronger than other bearish candles during this persistent rally we just had.
- Also, we should not expect the market to decline lower than 129.50 area, in consideration of a possible bullish impulse wave development where wave 4 should not overlap wave 1, and we are likely to be in wave 4 now.

- The GBP/JPY in the daily shows a market in a slightly declining channel.
- After the rally to end 2010, and start 2011, the market is now testing that declining channel resistance as well as the 200SMA.
- If the market breaks above 132.50 it may be heading towards 135.00 as noted in yesterday's post.
- Again, even though we can see potential for following the same behavior since 2010, we should not expect it. A conservative bearish expectation is the 129.50 pivot.

Is the GBP/JPY developing an impulse wave, or is the rally still part of a large declining channel? We would love to hear what you think.
Subscribe and become a member to share your views and join live discussions as well as webinars about the markets.

Fan Yang CMT
Chief Technical Strategist