British Pound Crosses Probe Significant Resistance

GBPJPY – The GBPJPY has rallied to and exceeded the upper end of the 6+ year bullish channel. The pair saw 240 this week and focus is now on the 1998 high at 240.96. Weekly MACD is healthy as the indicator continues to make new highs along with price. Weekly RSI is in overbought territory but only a cross below 70 would indicate a reversal opportunity. A weekly close above the aforementioned resistance line from the bullish channel (which is at about 237.75) gives scope to 240.96. A decline through 234.82 would indicate a bigger turn lower is in the works.

Key Levels & Technical Indicators

GBPCHF – The supporting trendline drawn off of the June and December lows keeps the bias a bullish one but the pair is at significant measured objectives. Since May 2003, the pair appears to be tracing out an A-B-C correction of the longer term decline from 2.7385. With the first leg of the rise from 2.0925 to 2.3910 (2,985 pips), the third leg (beginning at 2.1473) would equal the first leg at 2.4458. The pair did blow by this level but in the grand scheme of things this is a rather small error (200 pips off is still just .8% error). If 2.4688 is exceeded, then focus would shift to the 61.8% fibo of 2.7385-2.0915 at 2.4910. Bearish divergence on the weekly chart suggests that this move higher is exhaustive rather than the beginning of a new uptrend.

Key Levels & Technical Indicators

GBPAUD – We remarked last week that “The GBPAUD uptrend is safe for now following the bounce off of the trendline (drawn off of the December 2005 and March 2006 lows) and 200 day SMA. Still, a break below the trendline and moving average would strongly suggest a major change in trend. 2.4500 would be the next major support area. The double top at 2.5200 remains resistance and only a push above there warrants an aggressive bullish stance.” The pair hit 2.5132 this week and has turned down. The rejection of strength this week occurred right at a trendline drawn off of the 10/3 and 12/20 highs.

Key Levels & Technical Indicators

Table

CCI(21) – 21 day Commodity Channel Index
> 0 – bullish
0 > – bearish
> 100 – extremely bullish
-100 > - extremely bearish

RSI(14) – 14 day Relative Strength Index
> 50 – bullish
50 > – bearish
> 70 – overbought
30 > - oversold

MACD ? - MACD slope (MACD – MACD[1 | Quote | Chart | News | PowerRating])
> 0 – bullish
0 > - bearish

Mom(21) – 21 day Momentum
> 0 – bullish
0 > - bearish

ATR(14) – 14 day Average True Range (volatility)
Medium – 75th percentile* > ATR(14) > 25th percentile*
High - > 75th percentile*
Low – 25th percentile* >

*measured against past 3 months

Weekly Release Schedule

Kathy Lien is the Chief Currency Strategist at Forex Capital Markets. Kathy is responsible for providing research and analysis for DailyFX, including technical and fundamental research reports, market commentaries and trading strategies. A seasoned FX analyst and trader, prior to joining FXCM, Kathy was an Associate at JPMorgan Chase where she worked in Cross Markets and Foreign Exchange Trading.