Talking Points
- GBPJPY at key inflection point / channel support
- Scalp bias constructive above 173.75
- Limited event risk on tap until next week
GBPJPY Daily Chart
Chart Created Using FXCM Marketscope 2.0
Technical Outlook
- GBPJPY trading within well-defined ascending channel formation- bullish
- Now testing key Fibonacci/channel support 173.75
- July opening range set, 173.27- bullish invalidation
- Key resistance at 175.37/50- bearish invalidation
- Breach targets subsequent resistance objectives into the 177.45/70barrier
- Event Risk Ahead: BoE Rate Decision tomorrow
GBPJPY 30min Chart
Notes: Since we last highlighted the GBPJPY on June 25th, the pair has achieved two of the three profit targets before turning over just ahead of the final objective at 175.50 (high was 175.35). The subsequent pullback has taken sterling back into a key inflection point at 173.75. This level is defined by channel support dating back to May and the 61.8% extension taken from the advance off the 2014 low. The July opening range low comes in a tad lower at 173.27 and we’ll reserve this threshold as our near-term bullish invalidation level.
Intra-week momentum divergence in the RSI signature yesterday suggests the pair is vulnerable for a reversal with the weekly opening range low coming in at key support. Bottom line: looking to buy pullbacks while above 173.75 with only a break/close below the monthly low at 173.27 invalidating our medium-term bias heading into the end of July. Use caution heading into the BoE interest rate decision tomorrow as thin liquidity conditions could fuel added volatility in sterling 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 |
Bearish Invalidation | 30min | 174.27/33 | 61.8% & 100% Ext(s) / 38.2% Retracement |
Break Target 1 | 30min | 174.53 | 50% Retracement |
Break Target 2 | Daily / 30min | 174.72/81 | 61.8% Retracement / 78.6% Ext / Jan High |
Break Target 3 | 30min | 175.00 | 78.6% Retracement |
Break Target 4 | 30min | 175.15 | Weekly ORH / Soft Resistance |
Break Target 5 | Daily / 30min | 175.38/50 | 78.6% & 100% Ext(s) / July High / 1993 High |
Break Target 6 | 30min | 175.85 | 1.618% Extension |
Support Target 1 | 30min | 174.00 | 100% Extension |
Bullish Invalidation | Daily / 30min | 173.75 | 61.8% Retracement / Weekly ORL |
Break Target 1 | 30min | 173.50 | 61.8% Retracement |
Break Target 2 | Daily / 30min | 173.27 | July ORL / Former TL Res Dating 1/23 |
Break Target 3 | 30min | 173.00 | 78.6% Retracement |
Break Target 4 | Daily / 30min | 172.61/69 | 50% Ext / 88.6% Retrace / March Close High |
Break Target 5 | Daily / 30min | 172.35/42 | 50DMA / 50% Retracement |
Average True Range | Daily (20) | 81 | Profit Targets 20-23pips |
*ORH: Opening Range High
*ORL: Opening Range Low
Other Setups in Play:
- AUDUSD July Range Targets Key Support- Shorts Favored Sub 9440
- EURUSD July Opening Range Play- Shorts Favored Sub 1.37
- AUDCHF Rebounds Off Key Support- Longs Favored Above 8360
- GBPJPY Testing Key Inflection Zone- Shorts at Risk Above 172.70
- 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
---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
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