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Key Reversal Day Sets Ominous Tone for GBP/JPY

Key Reversal Day Sets Ominous Tone for GBP/JPY

Michael Boutros,

Talking Points


Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • GBPJPY outside-day reversal candle off slope resistance- bearish
  • Interim support targets at 184.98 backed by slope support / 184.16
  • Interim resistance 185.92 backed by 186.92 (bearish invalidation)
  • Daily RSI turning ahead of 60, pending support-trigger break – bearish
  • Key Event Risk Ahead: UK Industrial / Manufacturing Production & Trade Balance and US Non-Farm Payrolls tomorrow.

GBPJPY 30min

Notes: GBPJPY reversed off slope resistance on the back of today’s BoE interest rate decision with the decline looking to mark an outside-day reversal candle. Near-term confluence support coming up at the 185-handle and could offer a brief reprieve. Interim resistance stands at 185.54 backed by 185.92-186 with our bearish invalidation level set at the September high-day close at 186.95.

Bottom line: looking lower / selling rallies while below 187 with a break if the ascending parallel structure needed to validate a more significant reversal for the pair targeting 184.16 & 186.33. A quarter of the daily average true range (ATR) yields profit targets of 35-38 pips per scalp. Caution is warranted heading into tomorrow’s data prints out of the UK & US with the releases likely to fuel added volatility in sterling & risk sensitive pairs.

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Relevant Data Releases Next Week

Other Setups in Play:

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

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