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GBPJPY Pitchfork Setup- Scalps Target Sunday Gap

GBPJPY Pitchfork Setup- Scalps Target Sunday Gap

2014-09-08 19:51:00
Michael Boutros, Strategist

Talking Points

  • GBPJPY Sunday Gap / Monthly opening range setup
  • Gap low rebounds off key near-term support- rally to offer short entries

GBPJPY Daily Chart

GBPJPY Pitchfork Setup- Scalps Target Sunday Gap

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • GBPJPY Gaps below key support on the Sunday open
  • Descending pitchfork formation in play- bearish sub-bisector line
  • Interim resistance 170.88/96, 171.63- bearish invalidation
  • Support 169.60, 169, 1.6812/25- bullish invalidation
  • Daily RSI reversal at 60 / support trigger break- bearish
  • Event Risk Ahead: UK Trade Balance, Industrial & Manufacturing Production and Japanese PPIand Machine Orders tomorrow and Japanese Industrial Production & Capacity Utilization on Friday

GBPJPY 30min Chart

GBPJPY Pitchfork Setup- Scalps Target Sunday Gap

Notes: The Sunday gap took the GBPJPY below the 200-day moving average into a key support structure at 169.60/79. This level is defined by the confluence of the 1.618% extension off the highs, the 38.2% retracement of the February advance and the April and May lows. Our focus on the pair remains weighted to the downside while below the Andrew’s Pitchfork bisector line (daily chart) and we’ll look to sell rallies while below this feature. Note that a rally into 171.50 would be needed to fill the Sunday open gap with our bearish invalidation level just higher at 171.63.

Bottom line: RSI divergence at the lows today with a 60-breach in momentum suggests we may yet see further upside in the near-term – ultimately, this rally may offer more favorable short entries higher up with only a break above 171.63 shifting our focus back towards the topside into pitchfork resistance. Note that caution is warranted heading into data releases out of the UK and Japan later this week with the events likely to fuel added volatility in sterling and yen 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



Technical Relevance

Resistance Target 1

Daily / 30min

170.96– 171.09

6/11 Low / 38.2% Retrace(s) / Weekly ORH

Bearish Invalidation



50% & 38.2% Retrace(s) / Sunday Gap Fill

Break Target 1



61.8% Retracement

Break Target 2

Daily / 30min


50% Fibonacci Extension / Pivot

Break Target 3



61.8% Retracement

Break Target 4



Soft Resistance / Pivot

Break Target 5

Daily / 30min


61.8% Ext / 76.4% Retrace / September ORH

Support Target 1



August Low / Soft Pivot

Support Target 2

Daily / 30min


1.618% Ext / 50% Retracement

Bullish Invalidation

Daily / 30min


Weekly ORL

Break Target 1

Daily / 30min


100% Fibonacci Extension

Break Target 2

Daily / 30min


61.8% & 38.2% Retrace(s) / March Close Low

Break Target 3


166.95 – 167

Psych Barrier / Dec Swing Low (close basis)

Break Target 4



100% Ext / 78.6% Retrace / December Low

Average True Range

Daily (20)


Profit Targets 23-25pips

*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

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.