by Himanshu Jain
January 23, 2012: GBP/JPY did not break below the support of 117. and jump upwards from 117.37. It then broke the resistance of 118.45 and then moved to 120.01. The last week’s close was almost exactly at 55-day EMA level.
The price action during last week suggests that we can expect some more upward moves. On the upside now a break over the next resistance zone of 120.20 to 120.30 is critical. If GBPJPY breaks over this resistance zone then we can expect further move up towards 121.10. 121.10 would represent the Fibonacci 38.2% retracement of the downward move from October 30th, 2011to January 13th, 2012. A break of this should pave the way to a move towards 121.80. After 121.80 the currency pair will enter a very strong resistance area between 121.80 to 122.80. The movement in this zone is expected to be slow and any trading between this zone needs to be cautiously done. Only a break over 122.80 will make our mid-term outlook to bearish in the true sense to expect the gains towards the major psychological level of 125.00.
The above mentioned outlook will stay in place till the support over 118.30/118.40 stays in place. On the downside if GBPJPY manages a strong break below this support range then our short-term focus will move back towards downside to retest 117.28. But we would expect the resumption of a real downward rally only with the break of 116.82 low. As mentioned last weekend, this area not only represents the previous strong support but also the 115.00 strong psychological support would start working from here.
You may also check daily technical analysis of gbpjpy and the weekend gbpjpy forecast at ForexAbode.com
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