GBPJPY is moving in an ascending trend channel on its daily chart, as price is making its way to test the bottom of the range for a forex trade setup bounce. This lines up with the 170.00 major psychological support, which might keep any losses in check.
A bounce from this area could take GBPJPY back to the top of the channel near the 180.00 major psychological resistance and previous highs. Further gains could lead to an upside break, but it would take a considerable amount of buying pressure to result to a forex trade setup breakout.
On the other hand, a break below the channel support might mean more losses for the pair and a potential long-term reversal. The next support zone is located near the 168.00 major psychological level.
Forex Trade Setup Scenarios
A weak support bounce might only take GBPJPY up to the mid-channel area of interest near the 178.00 mark, which has been marked by consolidation in the previous months. The recently released UK CPI might undermine a forex trade setup bounce, as the figures came in much weaker than expected.
Event risks for this forex trade setup today include the UK jobs release, which could post a 34.2K gain in hiring, enough to bring the jobless rate down from 6.2% to 6.1%. A stronger than expected report might lead to a bounce while another disappointment could lead to the channel support breakdown.
There are no major reports lined up from Japan though, as risk sentiment appears to be supporting the lower-yielding yen so far. Geopolitical risk and concerns about the Ebola outbreak are weighing on risk appetite, along with falling commodity prices. Unless any improvements are seen in the next trading sessions, the path of least resistance for this forex trade setup might be to the downside for now.
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