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GBPJPY – A strong bullish momentum saw GBPJPY wiping out its two-week losses and breaking through the 132.905 level, its Mar 22’2011 high to close at 135.40 the past week. This rally is coming on the back of a loss of downside momentum at 122.40 and now leaves risk of further price extension towards the 135.47 level, its Feb 18’2011 high.

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A decisive break of that level will set the stage for a run at its Aug 03’2010 high at 137.75 followed by the 140.00 level, its psycho level. Its weekly stochastic is bullish and pointing higher supporting this view. Alternatively, on any weakness, the 132.95 level will be targeted at first where we expect a reversal of roles as support. Further down, support lies at the 130.19 level with a loss of there turning focus to the 127.40 level, its Mar 18’2011.

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All in all, GBPJPY remains broadly biased to the upside in the short to medium term as it looks to strengthen further in the day’s ahead.