GBP/JPY Mid-Day Outlook

Daily Pivots: (S1) 155.75; (P) 157.32; (R1) 158.24; More.

As GBP/JPY's recovery is still limited below 157.05 minor resistance, intraday bias remains on the downside for the moment. As mentioned before, sustained trading below 154.85 support will confirm that the cross has completed a head and shoulder top reversal pattern (ls: 160.44, h: 162.56, rs: 159.58). In such case, a short term top is at least formed and should bring deeper fall to trend line support (now at 151.07) and then key support level at 143.00. On the upside, however, a break above 157.05 minor resistance, without sustained trading below 154.85, will dampen this case and indicate that GBP/JPY is merely developing into sideway consolidation. Retest of 162.56 should be seen in this case.

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 channel support (now at 150.34) 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.

Subscribe to our daily and mid-day newsletter to get this report delivered to your mail box