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GBPJPY Targets Channel Support- Longs Favored Above 173.75

GBPJPY Targets Channel Support- Longs Favored Above 173.75

2014-07-09 18:44:00
Michael Boutros, Strategist
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Talking Points

  • GBPJPY at key inflection point / channel support
  • Scalp bias constructive above 173.75
  • Limited event risk on tap until next week

GBPJPY Daily Chart

GBPJPY Targets Channel Support- Longs Favored Above 173.75

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • GBPJPY trading within well-defined ascending channel formation- bullish
  • Now testing key Fibonacci/channel support 173.75
  • July opening range set, 173.27- bullish invalidation
  • Key resistance at 175.37/50- bearish invalidation
  • Breach targets subsequent resistance objectives into the 177.45/70barrier
  • Event Risk Ahead: BoE Rate Decision tomorrow

GBPJPY 30min Chart

GBPJPY Targets Channel Support- Longs Favored Above 173.75

Notes: Since we last highlighted the GBPJPY on June 25th, the pair has achieved two of the three profit targets before turning over just ahead of the final objective at 175.50 (high was 175.35). The subsequent pullback has taken sterling back into a key inflection point at 173.75. This level is defined by channel support dating back to May and the 61.8% extension taken from the advance off the 2014 low. The July opening range low comes in a tad lower at 173.27 and we’ll reserve this threshold as our near-term bullish invalidation level.

Intra-week momentum divergence in the RSI signature yesterday suggests the pair is vulnerable for a reversal with the weekly opening range low coming in at key support. Bottom line: looking to buy pullbacks while above 173.75 with only a break/close below the monthly low at 173.27 invalidating our medium-term bias heading into the end of July. Use caution heading into the BoE interest rate decision tomorrow as thin liquidity conditions could fuel added volatility in sterling crosses. Follow the progress of this trade setup and more throughout the trading week with DailyFX on Demand.

* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.

Key Threshold Grid

Entry/Exit Targets

Timeframe

Level

Technical Relevance

Bearish Invalidation

30min

174.27/33

61.8% & 100% Ext(s) / 38.2% Retracement

Break Target 1

30min

174.53

50% Retracement

Break Target 2

Daily / 30min

174.72/81

61.8% Retracement / 78.6% Ext / Jan High

Break Target 3

30min

175.00

78.6% Retracement

Break Target 4

30min

175.15

Weekly ORH / Soft Resistance

Break Target 5

Daily / 30min

175.38/50

78.6% & 100% Ext(s) / July High / 1993 High

Break Target 6

30min

175.85

1.618% Extension

Support Target 1

30min

174.00

100% Extension

Bullish Invalidation

Daily / 30min

173.75

61.8% Retracement / Weekly ORL

Break Target 1

30min

173.50

61.8% Retracement

Break Target 2

Daily / 30min

173.27

July ORL / Former TL Res Dating 1/23

Break Target 3

30min

173.00

78.6% Retracement

Break Target 4

Daily / 30min

172.61/69

50% Ext / 88.6% Retrace / March Close High

Break Target 5

Daily / 30min

172.35/42

50DMA / 50% Retracement

Average True Range

Daily (20)

81

Profit Targets 20-23pips

*ORH: Opening Range High

*ORL: Opening Range Low

Other Setups in Play:

---Written by Michael Boutros, Currency Strategist with DailyFX

For updates on this scalp and more setups follow him on Twitter @MBForex

To contact Michael email mboutros@dailyfx.com or Click Here to be added to his email distribution list

Join Michael for Live Scalping Webinar this Thursday on DailyFX Plus (Exclusive of Live Clients) at 12:30 GMT (8:30ET)

Interested in learning about Fibonacci? Watch this Video

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