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Talking Points:
- GBP/JPY Technical Strategy: Flat
- Support: 170.05 (23.6% Fib exp.), 169.08 (trend line)
- Resistance: 171.46 (38.2% Fib exp.), 172.61 (50% Fib exp.)
The British Pound rebounded against the Japanese Yen after forming a bullish Piercing Line candlestick pattern at support at a trend line set from August 2013. The pair is now testing resistance at 171.46, the 38.2%Fibonacci expansion, with a break above that exposing the 50% level at 172.61. Alternatively, a reversal below the 23.6% Fib at 170.05 opens the door for another test of the trend line, now at 169.08.
Prices are too close to relevant resistance to justify a long position from a risk/reward perspective. On the other hand, entering short looks premature absent a defined bearish reversal signal. With that in mind, 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