The cross got slammed down from a weekly high of 131.86 to finish the week just above the low of 126.90, having now fallen about 900 points over the last fortnight, with no apparent end in sight. The medium term indicators are all negative and point to a test of the next support at 126.35 (76.4% of 119.10/149.77) below which, the June 2103 low sits at 123.95.
The topside looks more problematic, above 127.65 could provoke a squeeze towards 128.00 and then to 128.25, beyond which could see further gains towards 129.00 and to 129.25, where the 100 HMA currently lies, but which seems unlikely for the time being. Selling rallies towards 129.00 still looks to be the way of it to me, although we may not get close.
Whereas EurJpy has already broken a lot lower, GbpJpy has so far been able to hold the uptrend support/200 DMA, albeit that it looks likely to be tested very soon on for all that much longer. Th cross looks headed to this support, at 177.50, a break of which could see an acceleration lower towards further support at the Dec/Jan lows at around 175.75 and then on to the Fibo level at 172.50 (23.6% of 116.85/185.02 ), although this is still a long way off.
The topside will find sellers on any return towards Friday’s high at 180.75 and above that the the 100 DMA at 182.10, although I don think we are going close in the next couple of days and prefer to sell into strength with a SL placed above 182.50.
The cross traded pretty much as expected last week and after running up to 1.4140, the cross headed sharply lower again to finish near its 1.3725 lows and looking rather ominously placed for the week ahead. Currently sitting on strong support (5.% pivot of 1.1611/15831), if this gives way, then a run to the 200 DMA at 1.3630 and on to the base of the major channel, currently at 1.3525 would seem to be on the cards. A break of the channel base would then open up 1.3225 (61.8% of 1.1611/1.5831).
With the 4 hour charts being oversold, the topside could see a run back to minor 1.3850 resistance and perhaps back to towards the 100 HMA at 1.3920 and even to 1.4000. If seen though I think it would be a good area to sell in preparation for a test of the channel base.
The cross did some serious damage last week, in rallying strongly from the 6 March 1.9339 spike low up to a high of 1.9853, and looking as though we were going to get a topside break, before falling hard, all the way back to 1.9250, closing near its lows. Not for the feint hearted! Further losses do look likely to me, although it could continue to be violent, but as long as we stay below 1.9400, I suspect the way is open for a run to 1.9180 (50% pivot of 1.8339/2.0028) and possibly to 1.8980 (61.8%).
Above 1.9400 would prove me wrong and would see the cross head back into the middle of its recent range for more choppy consolidation and the chance to rise to 1.9550/1.9650. Right now, if seen up at these levels it would appear to be a sell, but not overly confident.
The cross headed lower to meet the base of the long term channel, bottoming out at 0.7013 last week before a decent bounce after Mark Carney put the skids under Cable, sending the cross higher, at one stage reaching 0.7170.
Given the oversold nature of the daily charts and the potential for a squeeze higher, I now prefer to play the cross from the long side, looking to buy near term dips towards last seeks lows with a SL under 0.7000, but looking for a run up towards 0.7250 (23.6% of 0.8038/0.7013) and possibly to 0.7300 and beyond, to the 100 Month MA at 0.7370. I would again be a seller on an approach to this level, with a SL placed above the 100 MMA, looking for another reversal towards 0.7000 and eventually lower, towards the Nov 2007 low at 0.6919, and then lower still, but not yet.
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