GBP/JPY Technical Analysis: Sellers Breach 5-Month Support
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- GBP/JPY Technical Strategy: Flat
- Support: 171.56, 170.66, 169.96
- Resistance: 172.03, 172.45, 173.49
The British Pound moved lower against the Japanese Yen as expected after producing a bearish Evening Star candlestick pattern. A break below rising trend line set from mid-March has exposed the 50% Fibonacci retracement at 171.56. Pushing further downward below that targets the 61.8% level at 170.66. Alternatively, a reversal back above the trend line – now at 172.03 – opens the door for a retest of the 38.2% Fib at 172.45.
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