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GBPJPY Shorts Favored Below 178.50

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It took no more than 24 hours for the USD to regain what it had lost after Wednesday’s FOMC statement. A perfect example of USD strength can be seen in EURUSD. Following the FOMC event, the pair managed the largest rally in six years. As I write this, EURUSD is just 50 pips from Wednesday’s low.

As a result of continued USD strength, several pairs have broken key levels and are producing favorable trade setups. One such pair is GBPJPY. Let me say, however, that I’m cautiously optimistic about continued USD strength. The currency has had one heck of a run and is in need of a healthy pullback. When that might happen is anyone’s guess. For now we have to trade what the market is showing us, which is continued strength.

We have been watching this GBPJPY trend line from October of last year act as support over the past couple weeks. Now that the pair has closed below this level, we can begin watching for a retest as new resistance.

GBPJPY daily chart:

GBPJPY daily forex chart

There is an area of confluence that has built up between 178.40 and 178.70. This area is expected to act as strong resistance and should provide us with an optimal entry point. Key support comes in at 176.30, which formed a triple bottom between January and February.

Summary: Potential to sell a rally into the area between 178.40 and 178.70. Key support is 200 pips away at 176.30.

GBPJPY daily forex chart

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