Chart Of The Day: GBP/JPY

12/12/2008 - GBP/JPY - Relatively low recent volatility on GBP/JPY (a daily chart of which is shown) has been simultaneously consolidating and inching lower in its bid to drop below recent decade-long lows. On Friday, price has established a new 13-year low at 132.27. The current consolidation has taken the form of a descending wedge-like formation existing within the context of a long-term downtrend that has been in place since July 2007. Oscillators like the displayed Stochastics are having a hard time reaching above an intermediate reading (e.g., 50), which can be considered customary within entrenched down-trending situations. Any strong break above the downtrend support line could initially target prior support/resistance around the 140.70 region. There is, however, a slight technical bias towards a continuation of the general downtrend. Any significant drop below the newly established low (at 132.27) could plunge this pair to new depths, targeting first the key 130.00 level to the downside.

James Chen
Chief Technical Analyst

FX Solutions

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(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; uptrend lines in green; downtrend lines in red; horizontal support/resistance lines in yellow; 200-period simple moving average in light blue.)