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Talking Points:
- GBP/JPY Technical Strategy: Flat
- Support: 169.35 (50% Fib ret.), 168.05 (38.2% Fib ret.)
- Resistance: 172.24 (76.4% Fib ret., trend line), 173.63 (Jan 23 high)
The British Pound may be gearing up to push higher against the Japanese Yen after prices narrowly closed above resistance at 170.64, the 61.8% Fibonacci retracement. The next important upside barrier from here is 172.24, marked by the 76.4% level and a falling trend line set from the January 2 high. Alternatively, a reversal downward sees near-term support at 169.35, the 50% Fib.
Prices closed just a hair above resistance, casting doubt over the validity of the upside break and subsequent follow-through. That warns against rushing to enter long. Furthermore, yesterday’s candle has taken the form of a Shooting Star. This warns of a possible turn lower ahead, though confirmation required for an actionable short trade setup is absent. On balance, we will wait for greater clarity and remain flat for now.
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Daily Chart – Created Using FXCM Marketscope 2.0
— Written by Ilya Spivak, Currency Strategist for DailyFX.com