Forex Technical Update
The GBP/JPY failed to follow through bearish signals and instead found support at 117.26 for so far just a short-term rally. However it has run a bit overbought as price trades near the upper bollinger band (3 standard deviations from the 200 hour simple moving average). Also, there is a bearish divergence with the RSI. Overall market action can also be seen as a double top attempt. A break below the rising trendline should help confirm topping, and open up the retracement scenario. This should mean a break below 119.00.
A possible target is the 118.30 level. At least this will be an important level of support with 61.8% retracement and 200 Hour SMA. Support can also been anticipated when the RSI reading falls to 40. In a bullish market, this would warn the end of a corrective bearish cycle. The 4H chart shows a market that has flattened, killed the bearish momentum, and is showing signs of bullish momentum with the RSI reading above 70 and price action breaking declining trendlines.
120.00 (50% retracement). is the next short-term upside target after any near-term correction to the downside. A break above 120.66(61.8% retracement) is a strong sign that the market is not just in a corrective rally, but in a larger scale bull run. If the market does indeed return to the upside, and pushes through 120.66, it opens up 122.76 resistance pivot.