Talking Points
GBPJPY Sunday Gap / Monthly opening range setup
Gap low rebounds off key near-term support- rally to offer short entries
GBPJPY Daily Chart
Chart Created Using FXCM Marketscope 2.0
Technical Outlook
GBPJPY Gaps below key support on the Sunday open
Descending pitchfork formation in play- bearish sub-bisector line
Interim resistance 170.88/96, 171.63- bearish invalidation
Support 169.60, 169, 1.6812/25- bullish invalidation
Daily RSI reversal at 60 / support trigger break- bearish
Event Risk Ahead: UK Trade Balance, Industrial & Manufacturing Production and Japanese PPIand Machine Orders tomorrow and Japanese Industrial Production & Capacity Utilization on Friday
GBPJPY 30min Chart
Notes: The Sunday gap took the GBPJPY below the 200-day moving average into a key support structure at 169.60/79. This level is defined by the confluence of the 1.618% extension off the highs, the 38.2% retracement of the February advance and the April and May lows. Our focus on the pair remains weighted to the downside while below the Andrew’s Pitchfork bisector line (daily chart) and we’ll look to sell rallies while below this feature. Note that a rally into 171.50 would be needed to fill the Sunday open gap with our bearish invalidation level just higher at 171.63.
Bottom line: RSI divergence at the lows today with a 60-breach in momentum suggests we may yet see further upside in the near-term – ultimately, this rally may offer more favorable short entries higher up with only a break above 171.63 shifting our focus back towards the topside into pitchfork resistance. Note that caution is warranted heading into data releases out of the UK and Japan later this week with the events likely to fuel added volatility in sterling and yen 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
Resistance Target 1
Daily / 30min
170.96– 171.09
6/11 Low / 38.2% Retrace(s) / Weekly ORH
Bearish Invalidation
30min
171.50/63
50% & 38.2% Retrace(s) / Sunday Gap Fill
Break Target 1
30min
172.17
61.8% Retracement
Break Target 2
Daily / 30min
172.60
50% Fibonacci Extension / Pivot
Break Target 3
30min
173.05
61.8% Retracement
Break Target 4
30min
173.40
Soft Resistance / Pivot
Break Target 5
Daily / 30min
173.75/93
61.8% Ext / 76.4% Retrace / September ORH
Support Target 1
30min
170.41
August Low / Soft Pivot
Support Target 2
Daily / 30min
169.60/70
1.618% Ext / 50% Retracement
Bullish Invalidation
Daily / 30min
169.32
Weekly ORL
Break Target 1
Daily / 30min
169.00
100% Fibonacci Extension
Break Target 2
Daily / 30min
168.12/25
61.8% & 38.2% Retrace(s) / March Close Low
Break Target 3
Daily
166.95 – 167
Psych Barrier / Dec Swing Low (close basis)
Break Target 4
Daily
166.00/32
100% Ext / 78.6% Retrace / December Low
Average True Range
Daily (20)
95
Profit Targets 23-25pips
*ORH: Opening Range High
*ORL: Opening Range Low
Other Setups in Play:
Key Levels for NFPs – EURUSD, USDJPY & USDOLLAR in Focus
AUDCHF Gap Setup- 8545 Resistance Critical
Make or Break Time for USDCHF- Rally Vulnerable Sub 9133
AUDJPY Targets Key Resistance – Shorts Favored Sub 96.00
USDCAD Opening Range Play- Key Support in Focus Ahead of Jobs Data
GBPAUD Opening Range Break – Selling Rallies Sub August High
GBPUSD Shorts at Risk Above 1.68 Heading Into BoE, Inflation Data
NZDUSD at Key Support and August Range Low- Exhaustion or Break?
—Written by Michael Boutros, Currency Strategist with DailyFX
For updates on this scalp and more setups follow him on Twitter @MBForex
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Source: Daily fx