GBP/JPY Mid-Day Outlook

Daily Pivots: (S1) 129.00; (P) 129.82; (R1) 130.41; More

GBP/JPY drops sharply to as low as 127.99 so far today and the firm break of 128.63 confirms that recent decline from 137.73 has resumed. Intraday bias is now on the downside and further decline should be seen to test 126.73 low next. On the upside, in case of recovery, break of 131.64 resistance is needed to be the first signal of bottoming. Otherwise, outlook will remain bearish.

In the bigger picture, GBP/JPY is still trending well below the medium term falling trend line from 163.05 (now at 137.20) and thus fall from there is still in progress for a test on 118.18 low. Break there will confirm that whole down trend from 2007 high of 251.09 has resumed for 61.8% projection of 215.87 to 118.81 from 163.05 at 103.06 next, which is close to 100 psychological level. However, note that sustained trading above the trend line and break of 137.75 resistance will argue that fall from 163.05 is finished and turn focus to 145.94 for confirmation. Also, this will suggest that such fall is merely the second wave of the whole consolidation pattern from 118.81 and will bring another medium term rise to 163.05 and above before resuming the longer term down trend.

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