GBP/JPY Technical Analysis: Trying to Expose December Low

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Talking Points:

• GBP/JPY Technical Strategy: Flat
• Support: 184.58, 181.41, 178.85
• Resistance: 186.53, 187.53, 189.70

The British Pound slumped to a three-week low against the Japanese Yen, with prices trying to clear a path to December’s swing bottom. A daily close below the 23.6%Fibonacci retracement at 184.58 exposes the 38.2% level at 181.41. Alternatively a reversal above the 14.6% retracement at 186.53clears the way for a challenge of the December 22 high at 187.53.

Risk/reward considerations argue against entering short with prices 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, waiting for a more actionable opportunity to present itself.

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Daily Chart - Created Using FXCM Marketscope

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com