GBP-JPY: Having declined through the 139.23 level, its Nov. 26, 2009 low, and the 138.22 level, its Feb. 4 2010 low, to resume its medium-term down trend initiated from 163.06 (2009 high), GBP-JPY is set to retest those levels on a corrective recovery journey after putting in a temporary bottom at the 132.00 level the past week.

We expect the bears to defend that zone as it is also fortified with .382 Fibonacci Ret (150.56-132.00 selloff) at 139.10. A break and hold above that zone, though not envisaged at the current price levels, will turn further upside risk toward its Feb. 17, 2010/.618 Fib Ret at 143.44/60. Its daily stochastics is bullish and pointing higher,supporting this view.

On the downside, weakness on its corrective recovery failure will target the 134.80 level, where its March 4, 2010 high is located, with a turn below there setting the stage for a run at its 2010 low at 132.00. Beyond that level will resume its medium-term down trend toward the 131.45 level, its March 8, 2009 low, with a break paving the way for further weakness toward its Feb. 16, 2009 low at 129.60 and then its Feb. 12, 2009 low at 127.09. Overall, broader bias remains to the downside as long as the cross holds below the 139.23/138.22 levels, or even the 143.44/60 levels, though currently seen correcting.
Mohammed Isah is a technical strategist and head of research at FXTechstrategy.com, a technical-research Web site. He has been trading and analyzing the foreign exchange market for the past seven years. He formerly traded stocks before crossing over to the forex market, where he worked for FXInstructor LLC as a technical analyst and head of research before joining FXTechstrategy.com. He has written extensively on the forex market and technical analysis and his articles have been featured in The Technical Analyst Magazine, The Forex Journal Magazine, The International Business Times and FXstreet.com. At FXTechstrategy.com, he writes daily, weekly and long-term technical commentaries on currencies and commodities, which are offered to its clients. He also produces The Professional Suite for his subscribers. He provides full coverage of the forex market with specific focus on G10 currencies as well as the commodities markets, with focus on five key commodities.