(MENAFN - DailyFX) GBP/JPY testing confluence resistance; Outlook constructive while above monthly open Check out our 2018projections in our Join Michael for Live Weekly Strategy Webinars on The British Pound has rallied more than 4.7% against the Japanese Yen since the March lows with the advance now testing a key confluence resistance range. While the broader outlook does remain weighted to the topside, the rally may be at risk near-term while below this threshold.
GBP/JPY Daily Price Chart Technical Outlook: In , we highlighted a confluence resistance zone in GBP/JPY around 152. The region in focus is 151.84-152.17 where the 61.8% retracement of the yearly range converges on the 2017 high-day close and slope resistance. The immediate advance is vulnerable while below this threshold.
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GBP/JPY 240min Price Chart Notes: A closer look at price action see's GBP/JPY trading within the confines of a near-term formation with the upper parallel further highlighting the 151.84-152.17 resistance zone. A breach above this region would likely fuel accelerated gains targeting 152.86, the 2017 high at 153.41 and the 78.6% retracement at 154.12.
Interim support rests at 150.60 with bullish invalidation now raised to the monthly open at 148.96- a break below this level would suggest a larger correction is underway targeting the low-day close at 145.84 (not the favored scenario).
Why does the average trader lose?
Bottom line: Prices are testing up-trend resistance and a breach through this region would be needed to keep the immediate focus higher. That said, IF GBP/JPY is indeed heading higher, look for interim support within this near-term ascending structure on a move lower from here. Ultimately we'll favor buying pullback's targeting a breach of this critical resistance zone.
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GBP/JPY IG Client Positioning A summary of shows traders are net-short GBPJPY- the ratio stands at -1.01 (49.7% of traders are long) extremely weak bullishreading Long positions are 2.5% lower than yesterday and 0.4% higher from last week Short positions are 7.3% lower than yesterday and 0.7% lower from last week We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPJPY prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPJPY price trend may soon reverse lower despite the fact traders remain net-short. See how shifts in GBP/JPY retail positioning are impacting trend-
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- Written by Michael Boutros, Currency Strategist with DailyFX
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