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Talking Points:
- GBP/JPY Technical Strategy: Flat
- Support: 171.58, 170.54, 169.79
- Resistance: 172.30, 172.88-173.13, 173.47
The British Pound moved lower against the Japanese Yen as expected after producing a bearish Evening Star candlestick pattern. The emergence of positive RSI divergence preceded a correction higher as we suspected, with prices now testing the 38.2% Fibonacci retracementat 172.30. A daily close above this barrier exposes the 172.88-173.13 area, marked by a falling trend line and the 50% level. Alternatively, a reversal below the 23.6% Fib at 171.58 clears the way for a challenge of the August 15 low at 170.41.
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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