- near-term slope identified off the lows
- Updatedtargets & invalidation levels
- Short-bias at risk while above 131
Chart Created Using TradingView
GBPJPY has been probing the 2011 trendline support for the past few months with the most recent pullback rebounding off basic slope support extending off the July lows. The pair has been in consolidation since the yearly low with the near-term advance now eyeing initial resistance. Note that we’ve also marked some divergence in daily RSI which also suggests that the short-bias is at risk here. The immediate risk is for a move higher while above the low-day close (LDC) with a breach above 135.32 needed to suggest a larger scale reversal is underway.
The pair has continued to trade within the confines of a descending median-line formation (blue) dating back to the September highs with the exchange rate continuing to respect a newly identified slope off last week’s low. A breach of the objective weekly opening-range high today shifts the focus higher with advance now testing a near-term resistance confluence at the -handle. A breach above is needed to validate a near-term breakout in the pair with such a scenario eyeing initial targets at . Subsequent topside objectives are seen at & the key 61.8% retracement at .
From a trading standpoint, I’d be looking to fade weakness in GBPJPY while above the 2016 low-day close at with a break below the lower parallels (red) needed to shift the focus lower (bullish invalidation). A quarter of the daily average true range (ATR) yields profit targets of 52-55pips per scalp. Continue tracking this setup and more throughout the week- Subscribe to and take advantage of the DailyFX New Subscriber Discount.
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—Written by Michael Boutros, Currency Strategist with DailyFX
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