Talking Points
- GBP/JPY pullback rebounds off Fibonacci support- constructive
- Immediate focus higher- bullish invalidation 159.40.
- Updated targets & invalidation levels
GBPJPY Daily
Chart Created Using FXCM Marketscope 2.0
Technical Outlook: GBPJPY is set to post an outside daily candle after rebounding off support at the 50% retracement of the advance off the 2016 low at 159.40. Note that we’ve been marking some strong bullish divergence in momentum since the start of the year with a resistance-trigger break last month fueling the advance. A break above the sliding parallel extending off the September high keeps the long-bias in focus targeting confluence resistance into 164.85. We’ll keep our near-term bullish invalidation level steady at 159.40.
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GBPJPY 30min
Notes: GBPJPY is testing near-term confluence resistance around 161.53 where the uppper median-line parallel extending off the monthly high converges on the 50% retracement and former channel support, turned resistance. Expect some pullback from here but the trade remains constructive while above the median-line / 159.40/49. A break below confluence Fibonacci support at 158.30/48 is needed to shift the broader outlook back to the downside.
We’ll be looking to buy pullbacks / resistance triggers with a breach higher targeting 162.29/46 backed by the 163-handle & the 2014 low at 163.86. As noted earlier, key resistance stands at 164.85. A quarter of the daily average true range (ATR) yields profit targets of 54-58 pips per scalp. Added caution is warranted heading into key event risk next week with UK CPI, Retail Sales and Japanese inflation data likely to fuel volatility in the GBP & JPY crosses. Continue tracking this setup and more throughout the week- Subscribe to SB Trade Desk and take advantage of the DailyFX New Subscriber Discount!
Check out SSI to see how retail crowds are positioned as well as open interest heading into March trade.
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Relevant Data Releases
Other Setups in Play:
- AUD/USD Post-FOMC Rally at Risk Ahead of Australian Labor Report
- USDOLLAR Index Levels that Matter Heading into FOMC
- GBP/USD on the Defensive Ahead of UK Employment / Budget Statement
- AUD/USD Pullback Targets Near-term Support Ahead of FOMC, Aussie Jobs
---Written by Michael Boutros, Currency Strategist with DailyFX
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