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Talking Points:
- GBP/JPY Technical Strategy: Flat
- Support: 169.28 (23.6% Fib exp.), 167.68 (38.2% Fib exp.)
- Resistance: 171.31 (trend line), 173.63 (Jan 23 high)
Prices put in a Shooting Star candlestick below resistance at a trend line set from early January, warning the British Pound is losing bullish momentum and may be preparing to turn lower against the Japanese Yen. A break below the 23.6% Fibonacci expansion at 169.28 initially targets the 38.2% level at 167.68. Alternatively, a push above trend line resistance (now at 171.31) targets the January 23 high at 173.63.
Several back-to-back indecision candles reinforce the idea that previously established momentum has lost steam while flat-lining daily change readings warn a breakout may be near as volatility returns to more normal levels. Directional confirmation remains absent however and we will wait for a clear tipping of the scales to search out a trading opportunity.
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Daily Chart – Created Using FXCM Marketscope 2.0
— Written by Ilya Spivak, Currency Strategist for DailyFX.com