GBP/JPY: 8-Week Rally Faces Key Hurdle Ahead of U.K. CPI, BoE
- GBP/JPY approaching slope resistance ahead of UK CPI, BoE
- Updated targets & invalidation levels
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Technical Outlook: GBPJPY is approaching slope resistance at the upper median-line parallel extending off the September high, currently ~146.22. The immediate long-bias is at risk below this level to start the week with key near-term daily support eyed at 143.08/23- this region is defined by the 200-day moving average, the July swing high & the 61.8% line of the operative pitchfork formation and will serve as our near-term bullish invalidation level. The broader focus remains weighted to the topside while above confluence support into 138.50 with a breach higher targeting 151.97.
Notes: From a trading standpoint I’ll be looking to fade weakness while below the upper parallel (blue) with interim support eyed at the weekly open at 145.10 backed by the monthly open at 143.08 (near-term bullish invalidation). A break below this level would be needed to validate a more significant reversal targeting 141.60/74 & confluence support into 138.51/99- area of interest for exhaustion / long-entries.
A breach higher invalidates the reversal play with such a scenario targeting a longer-term median-line extending off the September 2015 low at ~148.20/30 backed by the 38.2% retracement of the June 2015 decline at 151.94/97. Keep in mind this is a wider-range setup with a quarter of the daily average true range (ATR) yielding profit targets of 50-56pips per scalp. Added caution is warranted heading into key UK data prints this week with CPI figures on tap tomorrow and the Bank of England interest rate decision slated for Thursday.
Relevant Data Releases
Other Setups in Play:
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Looking for more trade ideas? Review DailyFX’s 2016 4Q Projections
---Written by Michael Boutros, Currency Strategist with DailyFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.