First full trade week of the year
Hey everyone welcome back from the New Years break we got and hope you all had a good one, but I am glad to have everyone back. I have been looking over the charts for the last few days and noticed we had some very large spikes last week due to all the bank holidays some of the major currencies where having. If you look below we can see that both the GBP/JPY and the GBP/USD both had very large spikes and the GBPJPY has a gap from Friday`s closing to Sunday`s opening.
GBP/USD 4H 01-03-2010
GBP/JPY 4H 01-03-2010
As you can see last week had some very amazing spikes for the GBP which if you where lucky to get in the trades you ended up with quite a lot of pips.
Due to the fact that we had such large spikes last week and the price broke almost every single support and resistance line I had set up, I do feel like we will have many drop offs this week. I would keep an eye out on the GBP since it will most likely come down a few hundreds pips to recover form the imbalance set while the banks where closed. If you look at the screen shot of the GBP/JPY below I have provided the same support and resistance lines I previously mentioned before the New Years.
By looking at the chart above we see how the GBP/JPY price broke through three very strong support and resistance lines that would have signaled a strong increase in this pair. I am a little skeptic on whether the price is increase was a viable increase, what I mean by this is that since a lot of the banks where closed and liquidity was low an increase of this magnitude has to be taken with a grain of salt. This is the reason I have been saying we will most likely see a big price drop on the GBP/JPY pair and also on the GBP/USD.
When it comes on the GBP/USD I must also advise that I do not normally trade that pair but have just started looking at it now. So I would not take my word completely on it now since I still have no idea how to completely trade it.
As far as the GBP/JPY goes I do see a large drop coming soon and a recovery of the spike we saw. I would recommend to keep a close eye on those support and resistance lines since the 149.15 is completely broken we will see the price drop until it hits 147.43 and so on. I will keep you all posted on what I see but I must say this seems like a great week to make pips, so get your game face on.
Again remember to follow me on Twitter, Facebook, and YouTube. Also go look at the videos section which will keep getting updated as the year goes on and my new webcam and headphones get in.
Always keep you posted,
Gus FX
January 3rd, 2010 
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