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Talking Points:

• GBP/JPY Technical Strategy: Flat

• Support: 173.67, 172.01, 170.41

• Resistance: 175.35, 176.35, 177.39

The British Pound may be readying to launch a recovery against the Japanese Yen after completing a bullish Piercing Line candlestick pattern. Near-term resistance is in the 175.01-35 area, marked by the July 3 high and the 50% Fibonacci retracement, with a break above that on a daily closing basis exposing the 38.2% level at 176.35. Alternatively, a turn below the 61.8% Fibat 173.67 opens the door for a test of the 76.4% expansion at 172.01.

Prices are too close to 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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