Talking Points
GBPJPY reversal off resistance last week now checking support
Broader outlook constructive- support break to trigger correction
Event risk on from Japan & UK this week
GBPJPY Daily Chart
Chart Created Using FXCM Marketscope 2.0
Technical Outlook
GBPJPY holding within confines of ascending channel off the May low
Testing key interim support structure 172.61/78- bullish invalidation
Break targets support at 171.95 & 171.26
Broader outlook constructive above 169.70/93
Key Resistance 173.57/75
Breach targets resistance objectives at 174.82 & 175.54
Daily RSI support trigger pending (close sub-172.60 needed in price)
Event Risk Ahead: Japanese CPI tomorrow & final read on UK 1Q GDP on Friday
GBPJPY 30min Chart
Notes: GBPJPY has come back into a key inflection point we highlighted back in on April 1st when the pair was trading on the underside of this threshold. We are now checking Fibonacci support with channel support dating back to the May low also coming into focus just lower. Although the weekly opening range did break to the downside, the pair has now completed a 100% extension off the highs and if this is to be just a correction within the broader up-trend, this support level should hold.
Bottom line: the broader directional bias remains weighted to the topside while above 170 but a near-term break sub-172.60 could fuel further losses for the pair. Look for a reaction off this level heading into the close of the month with a break/close below risking further losses for the pound. A break back above 173 shifts the near-term bias back to the topside with such a scenario targeting subsequent scalp targets into key resistance at 1.7357/75.Caution is warranted heading into Japanese inflation data and UK GDP later this week as the releases are likely to fuel added volatility in sterling and yen based pairs. 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
30min
173.03
23.6% Retracement / European Range High
Resistance Target 2
30min
173.24
38.2% Retracement
Resistance Target 3
Daily / 30min
173.56
61.8% & 88.6% Retracement(s)
Bearish Invalidation
Daily / 30min
173.75/78
61.8% Ext / 78.6% Retracement
Break Target 1
Daily / 30min
174.00/08
100% Ext / June High
Break Target 2
Daily
174.39
2014 Open
Break Target 3
Daily
174.82
2014 High
Bullish Invalidation
Daily / 30min
172.71/78
100% Ext / March-April-May Close Highs
Break Target 1
Daily / 30min
172.52
6/8 Swing High / Soft Support / ~TL Support
Break Target 2
30min
172.33
38.2% Retracement
Break Target 3
Daily / 30min
171.80/95
50% Retracement / 50DMA
Average True Range
Daily (20)
80
Profit Targets 19-21pips
*ORH: Opening Range High
*ORL: Opening Range Low
Other Setups in Play Heading into NFPs:
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
EURAUD at Fresh 2014 Lows- Reversal Risk High Above 1.4420/40
Breakout or Break Down? NZD/USD Eyes Critical Resistance Pre-NFPs
USDCAD Risks Reversal Ahead of NFPs- 1.0950 Key Resistance
—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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Interested in learning about Fibonacci? Watch this Video
Source: Daily fx
