GBP/JPY Mid-Day Outlook

Daily Pivots: (S1) 158.35; (P) 160.10; (R1) 161.34; More.

GBP/JPY recovers strongly after falling to as low as 156.44 earlier today and break of 158.83 minor resistance suggests that an intraday low is formed. Outlook is turned neutral for the moment and some sideway trading might be seen. Nevertheless, considering bearish divergence condition in 4 hours MACD and RSI, we're still slightly favoring the bearish case that a short term top is at least formed at 162.56. Below 156.44 will bring fall resumption. Further break of 154.85 support will confirm this case and bring deeper fall to channel support at 149.54. On the upside, however, break of 162.56 will invalidate this view and indicate GBP/JPY's up trend is still in progress.

In the bigger picture, medium term rise from 118.81 is treated as correction to the fall from 215.87 and is expected to conclude in 155.88/167.34 resistance zone (38.2% and 50% retracement of 215.87 to 118.81). Break of 154.85 support will starts to argue that such correction has completed at 162.56 already. Sustained trading below mentioned channel support will add much credence to this case and will likely encourage a retest of 118.81 low at least. However, before that, another rise cannot be ruled out. But after all, we'll continue to look for reversal signal even if such rally will extend.

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