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Talking Points:
- GBP/JPY Technical Strategy: Flat
- Support: 173.50, 173.13, 172.44
- Resistance: 173.98, 174.50, 175.35
The British Pound declined as expected against Japanese Yen after prices put in a bearish Evening Star candlestick pattern. Sellers have moved to challenge rising trend line set from late May (173.50), with a break below that on a daily closing basis exposing the 38.2% Fibonacci retracement at 173.13. Alternatively, a move back above the 23.6% Fib at 173.98 clears the way for a test of the 14.6% retracement at 174.50.
Risk/reward considerations argue against entering short with prices trading in close proximity to support. On the other hand, the absence of a defined bullish reversal signal suggests taking up the long side is premature. We will remain flat for now.
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Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
