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Talking Points:
- GBP/JPY Technical Strategy: Flat
- Support: 169.86 (38.2% Fib ret.), 168.71 (50% Fib ret.)
- Resistance:170.29 (trend line), 171.27 (23.6% Fib ret.)
The British Pound may have initiated a major downward reversal against the Japanese Yen after prices took out support at a rising trend line set from August 2013. Sellers are now challenging the 38.2% Fibonacci retracement at 169.86, with a break below this barrier on a daily closing basis exposing the 50% level at 168.71. Alternatively, a turn back above the trend line (now at 170.29) targets the 23.6% retracement at 171.27.
Prices are too close to near-term support to justify entering a short trade from a risk/reward perspective. We will stand aside for now, waiting for an actionable setup to present itself.
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Daily Chart – Created Using FXCM Marketscope 2.0
— Written by Ilya Spivak, Currency Strategist for DailyFX.com