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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