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Although closing marginally lower for the past week, GBP/JPY remains vulnerable to the downside on corrective pullbacks. Its current vulnerability is coming on the back of a loss of price momentum at the 139.99 level in early April’2011.

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On continued bear threats, the cross will aim at the 130.19 level, its major support. We expect that to hold if tested and then turn the cross back up in the direction of its short term uptrend, which is now on hold.

We will change our short term uptrend view if that level is violated. In such case, the cross will weaken further towards the 127.52 level with a breach of that level turning risk towards its 2011 low at 122.40 though. Its weekly RSI is bearish and pointing lower supporting this view.

Alternatively, to reverse the above view, the cross will have to return above the 139.99 level, its April’2011 high. This will pave the way for further upside gains towards the 142.00 level with scope for extension towards the 145.95 level where its April 2010 high is located.

GBP JPY Technical Analysis April 25-29