GBP/JPY Technical Analysis: 3-Year Uptrend in the Balance (28/08/15)
The British Pound is treading water against the Japanese Yen as prices consolidate losses having dropped to the lowest level in nearly four months. Near-term support is in the 184.42-98 area, marked by the July 8 low and the 100% Fibonacci expansion. A break below this boundary on a daily closing basis initially targets the 123.6% level at 181.86. Alternatively, a reversal back above the 76.4% Fib at 186.98 sees the next upside boundary at 188.56, the 61.8% retracement.
Critically, current support is also the site of a major long-term trend line (not shown) guiding the dominant rising trend since June 2012. With the final days of August fast-approaching, even a near-term break of immediate support could thus double as a potentially tectonic trend shift opening the door for a sustained downward reversal.
As it stands, the absence of an actionable trade setup argues against taking a position on either the long or short side. We will carefully monitor positioning for confirmation of the larger trend reversal however, looking to enter short once an opportunity presents itself.