Earlier during the 5/27 session, GBP/JPY broke above the 171.85 resistance pivot and a falling trendline. This bullish signal was quickly countered as traders faded the GBP/JPY back towards the 171.00-171.21 support/resistance pivot area.
As we begin the 5/28 Asian session, price continues to threaten the support area, while the RSI in the 4H chart approaches 40. If the RSI breaks below 40, and price false below 171, we have a strong bearish signal.
The combination of a failed bullish breakout followed by a bearish break of a key level will put GBP/JPY in a bearish continuation scenario, at least in the short, intra-day time-frame.
Be careful with the bearish continuation scenario, because when looking at the daily chart, you see a sideways market. The prevailing trend has been bullish, so the bearish outlook should be limited to the very short-term, intra-session time-frame.
The first key support area will be in the 169.50-170 support/resistance pivot area. Below 169.50 the pair has the 167.75-80 support area in sight in the short-term. Ability to hold south of 170.00 on a subsequent pullback will improve trader’s confidence of the short-term bearish scenario.
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Earlier: Gold – Triangle Pattern Broken Down; 1268.50 in Focus