- GBP/JPY pullback rebounds off Fibonacci support- constructive
- Immediate focus high- bullish invalidation 159.40.
- Updated targets & invalidation levels
Chart Created Using FXCM Marketscope 2.0
Technical Outlook: GBPJPY is set to post an outside daily candle after rebounding off support at the 50% retracement of the advance off the 2016 low at 159.40. Note that we’ve been marking some strong bullish divergence in momentum since the start of the year with a resistance-trigger break last month fueling the advance. A break above the sliding parallel extending off the September high keeps the long-bias in focus targeting confluence resistance into 164.85. We’ll keep our near-term bullish invalidation level steady at 159.40.
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Notes: GBPJPY is testing near-term confluence resistance around 161.53 where the uppper median-line parallel extending off the monthly high converges on the 50% retracement and former channel support, turned resistance. Expect some pullback from here but the trade remains constructive while above the median-line / 159.40/49. A break below confluence Fibonacci support at 158.30/48 is needed to shift the broader outlook back to the downside.
We’ll be looking to buy pullbacks / resistance triggers with a breach higher targeting 162.29/46 backed by the 163-handle & the 2014 low at 163.86. As noted earlier, key resistance stands at 164.85. A quarter of the daily average true range (ATR) yields profit targets of 54-58 pips per scalp. Added caution is warranted heading into key event risk next week with UK CPI, Retail Sales and Japanese inflation data likely to fuel volatility in the GBP & JPY crosses. Continue tracking this setup and more throughout the week- Subscribe to SB Trade Desk and take advantage of the DailyFX New Subscriber Discount!
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Relevant Data Releases
Other Setups in Play:
- AUD/USD Post-FOMC Rally at Risk Ahead of Australian Labor Report
- USDOLLAR Index Levels that Matter Heading into FOMC
- GBP/USD on the Defensive Ahead of UK Employment / Budget Statement
- AUD/USD Pullback Targets Near-term Support Ahead of FOMC, Aussie Jobs
—Written by Michael Boutros, Currency Strategist with DailyFX