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Talking Points:
- GBP/JPY Technical Strategy: Flat
- Support: 171.58, 170.54, 169.79
- Resistance: 172.30, 172.88, 173.18
The British Pound declined against the Japanese Yen as expected after showing a bearish Evening Star candlestick pattern. The appearance of positive RSI divergence marked a correction higher as suspected, with prices now testing the 38.2% Fibonacci retracement at 172.30. A break above this barrier on a daily closing basis exposes the 50% level at 172.88. Alternatively, a turn below the 23.6% Fib at 171.58 opens the door for a test of rising trend line support at 170.54.
Prices are too close resistance to justify entering long from a risk/reward perspective. On the other hand, the absence of a defined bearish reversal signal suggests taking up the short side is premature. With that in mind we will remain flat for now.
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Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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