GBP/JPY Daily Chart 10/25/2012 3:00PM EDT
Bullish momentum: The GBP/JPY is continuing a rally that started at 118.83, held roughly in a rising channel since than. The RSI has tagged 70, held above 40 and is again about to kiss 70, reflecting bullish momentum. The use of the 200-day SMA (roughly) as a support is a slingshot, suggesting the further bullish action that is already taking place. Today’s (10/25) price action extends the rally toward the 130.00 handle.
Resistance: 130.00 is a psychological barrier as well as a previous support/resistance pivot. It was resistance in the beginning of March 2011. After it was broken, it supported a consolidation through March but broker early April. The area around 130 was treated as a pivot for a couple of times after that as well.
Trendline: On top of these resistance factors, the key one is the falling trendline from a 2012 resistance pivot near 145.75 as seen in the weekly chart below. This means that the 130.00 will be a key resistance, and also means that a break is a major step in the bullish scenario. The RSI in this time-frame kissed 70 earlier this year and held above 40 after a sharp retracement, but is now at 60. A break above 60 should reflect bullish continuation.
Targets: The short-term targets to the upside are 131.80/85 and 133.45/50 pivots, the latter one being the 2012-high. In the long term (as we are looking at the weekly chart), this also exposes the 140 handle/resistance pivot, and the aforementioned 145.75 pivot, and original of the yet-to-be-broken trendline. We are likely to have some more updates on GBP/JPY before the market can confirm further development toward these latter targets, so for now, the focus is around 130.00.
GBP/JPY Week Chart 10/25/2012
Fan Yang CMT is a trader, educator and a Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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