30 January 2012 at 7:29 GMT
GBPJPY – The gains from 117.29, the three-month low, were extended last week resulting in GBPJPY posting the second positive weekly performance in succession. However, sellers emerged at levels above 122.00 on Wednesday, with follow through selling overturning over half of the initial weekly gains. Although the downside could be limited, we do look for this negative sentiment to extend this week.
In view of these facts we are bearish while below a stop of 121.52. Support levels are 119.66, 50 percent pullback of losses from January 13 to 25 (117.29-122.06), with a move below that point targeting 119.10, 61.8 percent, or even towards 1117.76, the January 16 open.
The risk to this call is that selling interest is weaker than currently assessed. This would be signalled by a move through 121.52, Thursday’s open.
