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Talking Points:
- GBP/JPY Technical Strategy: Flat
- Support: 191.03, 189.45, 187.91
- Resistance: 192.27, 194.58, 196.45
The British Pound continues to test the boundaries of its two-month up move against the Japanese Yen, with negative RSI divergence warning a downturn may be ahead. Near-term trend line support is at 191.03, with a break below that on a daily closing basis exposing the 14.6% Fibonacci retracement at 189.45. Alternatively, a turn above the 23.6% Fib expansion at 192.27 opens the door for a challenge of the 38.2% level at 194.58.
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 an actionable opportunity to present itself.
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Daily Chart - Created Using FXCM Marketscope
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
