Talking Points
GBPJPY at key inflection point / channel support
Scalp bias constructive above 173.75
Limited event risk on tap until next week
GBPJPY Daily Chart
Chart Created Using FXCM Marketscope 2.0
Technical Outlook
GBPJPY trading within well-defined ascending channel formation- bullish
Now testing key Fibonacci/channel support 173.75
July opening range set, 173.27- bullish invalidation
Key resistance at 175.37/50- bearish invalidation
Breach targets subsequent resistance objectives into the 177.45/70barrier
Event Risk Ahead: BoE Rate Decision tomorrow
GBPJPY 30min Chart
Notes: Since we last highlighted the GBPJPY on June 25th, the pair has achieved two of the three profit targets before turning over just ahead of the final objective at 175.50 (high was 175.35). The subsequent pullback has taken sterling back into a key inflection point at 173.75. This level is defined by channel support dating back to May and the 61.8% extension taken from the advance off the 2014 low. The July opening range low comes in a tad lower at 173.27 and we’ll reserve this threshold as our near-term bullish invalidation level.
Intra-week momentum divergence in the RSI signature yesterday suggests the pair is vulnerable for a reversal with the weekly opening range low coming in at key support. Bottom line: looking to buy pullbacks while above 173.75 with only a break/close below the monthly low at 173.27 invalidating our medium-term bias heading into the end of July. Use caution heading into the BoE interest rate decision tomorrow as thin liquidity conditions could fuel added volatility in sterling crosses. Follow the progress of this trade setup and more throughout the trading week with DailyFX on Demand.
* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.
Key Threshold Grid
Entry/Exit Targets
Timeframe
Level
Technical Relevance
Bearish Invalidation
30min
174.27/33
61.8% & 100% Ext(s) / 38.2% Retracement
Break Target 1
30min
174.53
50% Retracement
Break Target 2
Daily / 30min
174.72/81
61.8% Retracement / 78.6% Ext / Jan High
Break Target 3
30min
175.00
78.6% Retracement
Break Target 4
30min
175.15
Weekly ORH / Soft Resistance
Break Target 5
Daily / 30min
175.38/50
78.6% & 100% Ext(s) / July High / 1993 High
Break Target 6
30min
175.85
1.618% Extension
Support Target 1
30min
174.00
100% Extension
Bullish Invalidation
Daily / 30min
173.75
61.8% Retracement / Weekly ORL
Break Target 1
30min
173.50
61.8% Retracement
Break Target 2
Daily / 30min
173.27
July ORL / Former TL Res Dating 1/23
Break Target 3
30min
173.00
78.6% Retracement
Break Target 4
Daily / 30min
172.61/69
50% Ext / 88.6% Retrace / March Close High
Break Target 5
Daily / 30min
172.35/42
50DMA / 50% Retracement
Average True Range
Daily (20)
81
Profit Targets 20-23pips
*ORH: Opening Range High
*ORL: Opening Range Low
Other Setups in Play:
AUDUSD July Range Targets Key Support- Shorts Favored Sub 9440
EURUSD July Opening Range Play- Shorts Favored Sub 1.37
AUDCHF Rebounds Off Key Support- Longs Favored Above 8360
GBPJPY Testing Key Inflection Zone- Shorts at Risk Above 172.70
GBPCAD Scalps Target Weekly Range- Bullish Bias at Risk Sub 1.8480
GBPAUD Scalps Favor Buying Dips Post June Range Break
GBPNZD Weekly Opening Range Play- 1.96 Resistance in Focus
AUDJPY Long-bias at Risk Sub 96- BoJ / China Data On Tap
—Written by Michael Boutros, Currency Strategist with DailyFX
For updates on this scalp and more setups follow him on Twitter @MBForex
To contact Michael email mboutros@dailyfx.com or Click Here to be added to his email distribution list
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Source: Daily fx