Last week GBP/JPY moved as we indicated during the last weekend. The currency pair faced some good resistance just a few pips above the mentioned resistance level of 122.80 but then GBP/JPY broke over that resistance and moved as high as 123.18, found resistance there and closed for the week at 122.29.
The price action and the facts that the resistance did not even cause a break of either 5-day EMA support or the Tenkan-sen support of daily Ichimoku cloud, indicate that the upward sentiments are still holding. The very significant point was a break over 122.80. As we had mentioned, the range between 121.80 to 122.80 had proved to be an extremely strong resistance zone during November 2011 end to December 2011 end.
For the coming week, initially we would expect some sideways move. Even we will not ignore the possibilities of some downward consolidation towards 121.30 but overall we remain favor of some more upward gains. On the upside, a break of 123.18 should take GBPJPY towards 124.20 and a break of 124.35 should also target a break of 125.00 psychological resistance to take GBP/JPY towards 125.60.
Please note that even with the above outlook, our overall outlook is not bullish and we remain in favor of another fall from one of the mentioned resistance levels.
On the downside, if the currency pair breaks below 120.80 then we would expect further downward move towards 121.30. A break below 120.20 would represent a break of Kijun-sen support of daily Ichimoku cloud as well as 22-day EMA. Below this another support expected will be near 120.70 (55-day EMA). At this level even the psychological support of 120.00 ranges will also start coming. Our focus will change back towards deeper moves with a a break of first 120.20 and then 120.00. In such case we would also expect some further downward move towards 119.20. Though we do not expect it during next week but any break below 119.20/119.15 will make our outlook bearish for GBP/JPY for a retest of the recent low of 117.28.
You may also check the weekly gbpjpy forecast/Outlook and daily gbp/jpy technical analysis at ForexAbode.
