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Talking Points:
- GBP/JPY Technical Strategy: Flat
- Support: 180.72, 178.28, 176.32
- Resistance: 185.01, 187.44, 189.41
The British Pound may be preparing to turn lower against the Japanese Yen following the appearance of a bearish Dark Cloud Cover candlestick pattern. Negative RSI divergence bolsters the case for a downside scenario. A daily close below the 180.72-181.08 area marked by the November 10 low and the 23.6% Fibonacci exposes the 38.2% level at 178.28. Alternatively, a turn above the 23.6% Fib expansion at 185.01 opens the door for a test of the 38.2% threshold at 187.44.
Risk/reward considerations argue against entering short with prices in close proximity to support. On the other hand, the absence of a defined bullish reversal signal suggests taking up the long side is premature. We will remain flat for now, waiting for a more actionable opportunity to present itself.
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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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