The weakness in the GBPUSD and now weakness in the USDJPY has sent the GBPJPY plunging lower today. The move has taken the price below the 100 day MA for the first time since February 2nd (and also sent the price below the 38.2% retracement of the 2012 range at the 127.278). The 100 day MA comes in at 126.325 today and this is now close resistance. Until the price can move back above this level, the buyers are likely to be concerned about another run to the downside. The next target being the 50% of the 2012 range at the 125.367 level. The low from Feb 23rd comes in at 125.433. So this areas should find buyers with stops below.
A move back above the 100 day MA alleviates some of the fear and should lead to additional short covering. Traders will be looking at the 126.51-65 as the target resistance. This is the 38.2-50% of the last leg/wave lower and what I call the “Correction Zone”. In a trending market, if the price holds below this area it says to me the sellers remain in control of the market and the buyers have not proven they can take back control. I would expect sellers against this area with stops above 126.655.
