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Talking Points:
- GBP/JPY Technical Strategy: Flat
- Support: 166.45 (23.6% Fib ret.), 164.93 (trend line from Aug’13)
- Resistance: 168.05 (38.2% Fib ret.), 169.35 (50% Fib ret.)
The British Pound is extending a recovery against the Japanese Yen, with prices testing resistance at 168.05 marked by the 38.2% Fibonacci retracement. A break higher initially targets the 50% level at 169.35. Alternatively, a reversal below the 23.6% Fib at 166.45 on a daily closing basis eyes a rising trend line set from August 2013, now at 164.93.
Risk/reward considerations argue against entering long with prices squarely at near-term resistance. On the other hand, the absence of a clearly defined reversal signal suggests entering short is premature. Furthermore, the Yen’s sensitivity clouded risk appetite trends warn against taking directional bets on fundamental grounds. As such, we will continue to stand aside for now.
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Daily Chart – Created Using FXCM Marketscope 2.0
— Written by Ilya Spivak, Currency Strategist for DailyFX.com