Key Reversal Day Sets Ominous Tone for GBP/JPY
- GBP/JPY outside reversal day shifts focus lower
- Updated targets & invalidation levels
- Event Risk on Tap This Week
Chart Created Using FXCM Marketscope 2.0
- 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.
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:
- GBP/USD Breakdown Potential on BoE, NFP- Levels to Know
- NZD/USD Shorts at Risk Ahead of Jobs Data- 6640 Key Support
- Webinar: Big Data Week to Threaten USD- RBA, BoE, NFP Setups in Focus
- AUD/JPY Shorts Primed for BoJ, RBA
- EUR/JPY in Free Fall Ahead of BoJ- Bearish Sub 134
---Written by Michael Boutros, Currency Strategist with DailyFX
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