The break lower came on Wednesday with the GBP/USD closing below the rising daily channel base and the 55-DMA ($1.6748). Initial resistance is noted in the $1.6775-1.6818 region with bulls needing a close above to ease the bearish pressure. Immediate focus for bears has shifted to the $1.6659 level where the 100-DMA is noted. A close below the 100-DMA has not been seen since Q3 2013 with a close below expected to add significant weight to the bearish case.
The Y101.58 level continues to support but following the failure at the 55-DMA hurdle again on Tuesday bearish focus is dominating. Bulls need to see a close above the 21-DMA to ease the bearish pressure but overall a close above the 100-DMA is now needed to end bearish hopes and shift focus back to the Y103.02 level and then 2014 highs above. Bears are currently focused on a break below initial support and a close below the 200-DMA which has remained elusive.
The failed attempt to make headway above Y139.33 Tuesday resulted in the EUR/JPY heading sharply lower to test the 200-DMA (Y138.33) on Wednesday. The pair had its first dip below the 200-DMA since Nov 2012 in Asian trading today and continues to flirt with the 200-DMA. Bears look for a close below to add weight to the bearish case that is targeting fresh 2014 lows. Bulls need to see a close above Tuesday’s high to help ease bearish pressure.
Bulls are taking comfort in the break and close above the pivotal Gbp0.8119 level combined with correcting O/S daily tech studies. Immediate focus has shifted to the Gbp0.8155-59 region with a break above hinting at a return to the Gbp0.8231-57 region. Bears need to see a close back below Gbp0.8119 to signal a false break higher and shift immediate focus back to the recent 2014 low.