Forex Technical Update
The title sounds late because if you look at the short-term and even intermediate term market, the GBP/JPY has already been bullish since mid-January. The daily chart shows the RSI already above 70, which in the short-term can be a sign of overbought conditions and suggest a corrective decline. The daily chart also shows a break above some important resistance levels, including a trendline that is seen more clearly in the weekly chart. After extending beyond a swing projection target at 127.70, the market has 132.8% expansion target at about 131.15, 150% at 132.90, and 161.8% at 134.15.
The weekly chart shows that the market has a strong break above a declining trendline, that connects the 140.30 high of 2011, to the 163 high of 2009. The RSI has broken above 60 for the first time since it tagged 30 in January of 2008. A bearish market should defend the 60 level in the RSI, so this break suggests a loss of bearish momentum. A tag of 70 introduces bullish momentum. On the weekly chart, the 1-2-3 represent areas of potential targets in this bullish breakout.
1 is the 61.8% retracement of 131.30, which is between the 132.8% and 150% expansion mentioned above. 2 is a pivot area above 135.00, up to a double bottom breakout target (using the range of the pattern projected into the direction of the breakout from the point of breakout), which is near 136.50. Finally, the most aggressive target this year for GBP/JPY is the 2011 high, just above 140.00 at 140.29.
Note that this is a long-term projection for those analyzing intraday charts. The slide from 140.29 to 116.79 took more than 5 months. We are about 2 months in for a new uptrend, so there could be a few months before this bullish scenario develops.
Fan Yang CMT a trader, educator and a Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.0