GBPJPY Long Scalps at Risk Ahead of UK GDP- 174 in View

Talking Points

• GBP/JPY weekly opening range break triggers topside scalp bias
• Bullish invalidation at weekly low
• Event risk on tap this week

GBP/JPY Daily Chart

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

• GBPJPY breaches weekly opening range high / resistance- bullish
• Resistance objectives at 173.68, 174.14/34 & 175.84-176.04 – bearish invalidation
• Support at 200DMA & 171.05- bullish invalidation
• Daily RSI resistance trigger / 50-breach pending- constructive
• First sub-40 read on momentum this month since June 2012- Longer-term bearish
• Event Risk Ahead: UK GDP tomorrow & Bank of Japan Interest Rate Decision next week

GBP/JPY 30min Chart

Notes: The GBPJPY has broken through the weekly opening range high at the 172.84/98 region with our near-term focus higher in the pair while within the confines of the Andrew’s pitchfork formation off the October low. Note that October marked the first dipped into sub-40 territory on the daily momentum signature since 2012 and keeps our medium-run bias weighted to the downside while below 176. This level would also complete a 100% extension (2-equal legs up) off the monthly low.

Bottom line: looking to buy pullbacks while above 173-figure with a breach above 174.34 eyeing more significant technical resistance into the 176-handle. A break below 173 puts us neutral with only a move sub 171 shifting our focus back to the short-side of the trade targeting the October lows. Caution is warranted heading into tomorrow’s key event risk with the UK advanced 3Q GDP release likely to fuel added volatility in sterling crosses. Market expectations are for a slowing recovery with consensus estimates calling for a print of 0.7% q/q vs the 0.9% rate of growth seen in the three months through June. Follow the progress of trade setups like these 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

*ORH: Opening Range High

*ORL: Opening Range Low

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---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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