Talking Points

GBPJPY responds to near-term resistance- short scalps favored
Updated targets & invalidation levels
Event Risk on Tap This Week

GBPJPY Daily

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

GBPJPY reverses at resistance – breaks weekly opening-range low/channel support- bearish
Interim support at 183.91 backed by 182.05 & the monthly open at 181.33
Resistance & bearish invalidation at 186
Breach targets subsequent resistance objectives at 186.47 & 2015 open at 186.70
Daily RSI turn ahead of 60 – pending support-trigger break would be bearish
Key Event Risk Ahead: Japan Retail Sales/Trade tonight, Industrial Production tomorrow and CPI & BoJ on Thursday night.

GBPJPY 30min

Notes: GBPJPY responded to a major Fibonacci confluence at 186.01/08 with a break below the weekly opening range shifting the focus to the short-side. Note that this region is defined by the 100% extension of the advance off the monthly low (two equal legs up) & the 38.2% retracement of the August decline and may have completed a more prominent correction.

That said, the immediate focus is lower (selling rallies) while below the median-line extending off the 10/21 high with a break below 184 targeting initial objectives at 183.47 & the 61.8% retracement at 182.80. A breach above the initial weekly opening range lows at 185.25 would be needed to shift the focus back to the long-side targeting the aforementioned key resistance zone at 186.

A quarter of the daily average true range (ATR) yields profit targets of 35-38pips per scalp. Caution is warranted heading into the end of the week / month with a long list of event risk still on tap. Of particular interest will be FOMC interest rate decision, Japanese Retail Sales / Trade, Industrial Production, Jobless rate, CPI and the BoJ. It’s going to be a big week for the yen crosses.

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Relevant Data Releases Next Week

Other Setups in Play:

USDCAD Risks Reversal Below 1.3150 on Canadian CPI
EURCAD Bulls Brace for ECB- Rally Vulnerable Sub 1.4955
NZDCAD Posts Outside Day Reversal Pre-BoC; Shorts Face 8700 Hurdle
Webinar: ECB/BoE Playbook- EUR/GBP Shorts Target Key Support Zone
EURGBP Reverses Off Critical Resistance- Shorts Favored Sub 7386

—Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michaelon Twitter @MBForex contact him at mboutros@dailyfx.com or Click Here to be added to his email distribution list

Join Michael for Live Scalping Webinars on Mondays on DailyFX and Tuesday, Wednesday & Thursday’s on SB Trade Desk at 12:30 GMT (8:30ET)

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Source: Daily fx