GBP/JPY 4H Chart 7/23/2012 9:40AM EDT
The GBP/JPY has been in a decline since the beginning of July, and is extending lower to start the week. It fell below the support and psychological handle near 122. The GBP/JPY is also building persistent bearish momentum as it pushes the 4H RSI below 30 again, after failing to sustain a break above 60.
The moving averages in the 4H chart are also in bearish alignment after Friday’s bearish swing, which has not ended, though we might be a tad oversold for the near-term.
Also note in the 4H chart that the market is testing a projected channel support, using a parallel line to the declining resistance. If we get a pullback from 121, the previous support at 122.00 might be a key resistance to consider. A break above 122.90 could spell trouble for the bearish outlook, although a break above the declining trendline is needed to introduce any bullish outlook.
The daily chart shows that the next key support pivot is near the 119.00 handle. Below that we have the 2012 low near 117.25. These are the medium targets for now. It should also be noted that the 116.90 area is the 2011 low.