GBP/JPY Technical Analysis: Bottom Forming Below 171.00?
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- GBP/JPY Technical Strategy: Flat
- Support: 170.94, 170.50, 169.78-9
- Resistance: 171.58, 172.30, 172.88
The British Pound declined against the Japanese Yen as expected after putting in a bearish Evening Star candlestick pattern. A daily close below the 14.6% Fibonacci expansionat 170.94 exposes the 26.6% level at 170.50. Alternatively, a turn above the 23.6% Fib retracement at 171.58 opens the door for a test of the 38.2% threshold at 172.30.
Risk/reward considerations argue against entering short with prices sitting squarely at support. Positive RSI divergence likewise discourages selling. 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