HIGHLIGHTS:

GBPUSD: Bounces Off Its Channel Top - An attempt to break and close above its ST falling channel failed Monday after giving back most of its intra day gains to close marginally higher printing a rejection candle...

USDJPY: Biased To The Upside -The pair could be heading to a third day of upside gains having maintained its recovery following its lower level rejection candle printed last week...Learn more

GBPUSD: An attempt to break and close above its ST falling channel failed Monday after giving back most of its intra day gains to close marginally higher printing a rejection candle. We maintain our call for lower level prices while the pair is trapped in the said falling channel. In that case, downside weakness should target its Mar 11’09 low at 1.3655 at first and then its YTD low at 1.3504 level with a clearance of there activating its longer term downtrend towards the 1.2856 level, its Sept’85 low. The risk to this downside view will be a decisive break and close above the mentioned falling channel and subsequent upmove through its Feb 02’09 low at 1.4052 and the 1.4137 level, its Feb 12’09 low. These levels could pose threats to further upside gains if they materialize but if that fails to happen, we could see further upside towards its Jan 16’09/Feb 09’09 highs at 1.4981/86.All in all,GBP though has embarked on recovery looks vulnerable to the downside medium to longer term.

USDJPY: The pair could be heading to a third day of upside gains having maintained its recovery following its lower level rejection candle printed last week. Successfully pushing through its minor resistance residing at the 99.19 level being its Mar 09’09 high will open up further upmove towards the 99.68 level, its Mar 05’09 high with a cut through that level resuming its recovery triggered at the 87.13 area and exposing its psycho level/Nov 04’08 high at 100.00/55.Above there will call for additional upside gains towards the 102.22 level, marking its double bottom price target. Its daily RSI is positive and advancing suggesting further upmove. Supports are located at the 97.43 level, its Nov 24’08 high and the 96.00 level, its psycho level with the next one positioned at the 94.62 level ,its Jan’09 high. Though not seen yet, the latter level should turn off sharp declines if seen. On the whole, while the pair maintains above the 96.58 and 95.57 levels, risk remains to the upside for the resumption of USDJPY’s bullish recovery started at the 87.13 level.