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- GBP/JPY Technical Strategy: Short at 172.26
- Support: 171.27 (23.6% Fib ret.), 169.86 (38.2% Fib ret.)
- Resistance:172.45 (trend line), 172.82
The British Pound is at risk of continued weakness against the Japanese Yen after prices dropped below rising trend line support set from early February. Prices bounced from the 23.6% Fibonacci retracement at 171.27 to re-test the trend line (now at 172.45), with a break above that exposing a horizontal barrier dating back to early March at 172.82. Alternatively, a move through support targets the 38.2% level at 169.86.
The bounce has shifted risk/reward parameters such that a short position is now acceptable. We will now attempt a small short position, aiming for 171.27 as an initial objective. A stop-loss will be activated on a daily close above 172.82. We will take profit on half of the trade at the first target and trail the stop-loss to the breakeven level.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com