GBP/JPY Mid-Day Outlook 12.1.2010

Intraday bias in GBP/JPY remains neutral for the moment with 147.03 minor support intact. So far, there is no change in the view that price actions from 139.96 are merely consolidations to the fall from 163.05, with the choppy rise from 139.26 as the third leg. Below 147.03 will flip intraday bias back to the downside. Further break of 145.96 support will confirm that whole rise from 139.26 has completed and will target a retest of this support next. On the upside, even in case of another rise, we'd expect further loss of moment and upside should be limited by 153.21 resistance to conclude the consolidations.

In the bigger picture, medium term rebound from 118.18, which is a correction to the long term down trend from 07 high of 251.90, has completed at 163.05 already. Fall from 163.05 is expected to resume after sideway consolidation from 139.69 completes and should target a new low below 118.81. However, note that sustained break of 61.8% retracement of 163.05 to 139.26 at 153.96 will argue that fall from 163.05 has finished already and will in turn indicate that rise from 118.81 is still in progress to another high above 163.05 before conclusion.