Forex Technical Update

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GBP/JPY 4H Chart 8/14/2012 9:00AM EDT

"GBP/JPY

The GBP/JPY extended the rally noted in the previous update and pushed to new highs for August during the 8/14 European session. As we start US trading, the pair is poking at a medium-term consolidation resistance area roughly between 123.77 and 124.06. as ween in the 4H chart.

The RSI reading shows that there was no development of bearish momentum, and in fact the momentum is range-bound, apparent in price action.

While the 124.05 resistance and 120.85 support holds a consolidation range from July into August, the daily chart shows a wider consolidation range between 125.80 resistance and 118.83 support.

In fact the daily chart also shows the market trading between a declining trendline from the March and 2012 high at 133.48 and a rising trendline going back to the January and 2012 low at 117.40. It can be said that in 2012, the GBP/JPY has been trading sideways, and so far in a congestion or triangle.

Therefore, a break above the consolidation resistance zone should not be a big deal. It does open up the declining trendline as well as the 125.80 pivot. A break above that exposes a swing projection to 127.95, seen in the daily chart. Although it would also expose the 2012 highs, it should be noted that in this sideways market set in 2012, there should be a gravitational pull toward the mean price action around the 200-day SMA, which is about 124.50.

GBP/JPY Daily Chart 8/14/2012 9:10AM EDT

"GBP/JPY

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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