GBP/JPY Weekly Outlook - August 11 to 15, 2014
GBP/JPY failed in its attempt of recovery at 173.50 and fell strongly to touch 170.71 before closing for the week at 171.15.
The strong fall and the break below June 11's 170.97 made the short-term bearish outlook stronger. However, the support seen in the upper half of 170.00 range suggests that the possibilities that the psychological support of 170.00 may hold should not be overlooked. Considering this, some upward consolidation may take place initially during the next week. On the upside we will expect a strong resistance below 172.40. The 172.38/172.39 support will be expected to turn into resistance now.
If the above mentioned resistance holds and a break below the recent 170.50 takes place then a test of 170.00 will not be ruled out. Any break below 170.00 should take GBP/JPY to retest 169.54.
Overall the failure at 175.37 can be considered as the psychological resistance of 175.00 and that is very natural. In case support holds over 169.54 then the bearish outlook will neutralize and this should keep the pair in an extended range bound mode between 170.00 and 175.00. However, a decisive break below 169.54 will have stronger implications for an extended downside. Such a move should target 167.55 next where the support of the upper edge of the weekly Ichimoku cloud should act to limit the fall.
On the upside, any failure of 172.40 resistance will start neutralizing the bearish outlook. Such a move will be the first indication of bottoming and that should then target the resistance zone of 174.23 to 174.55.
From the longer-term perspective, The break over 163.07 had indicated a bottoming after the great fall of 2008/2009. The subsequent breaks over 170 and then even 175.00 go in favor of that outlook. We are taking the recent fall just as consolidation and overall we expect further gains. If the support near 170.00 holds and a decisive break over 175.37/175.55 resistance zone takes place then GBP/JPY will be expected to first target 177.50 and then should target the next psychological level of 180.00. In fact we do not rule out the possibilities of hitting 184.95 which is the 50% retracement of the great fall from 251.09 of mid-2007 to 116.84.
Analyze Yourself - Various views of GBP/JPY Price-Action