STERLING/YEN PRICE ACTION STILL CONSTRUCTIVE; BUY @141.00
Despite any fundamental bias that we have which points to elevated risk aversion, lower equities and a lower cross rate, we can not ignore the price action on the cross which still remains constructive since basing out by 118.85 back in January.
Gbp/Jpy: The market still trades above rising trend-line support off of the January lows, and as such, any dips towards this level should be bought into while the cross adheres to the bull channel. Trend-line support currently comes in by the 141.80 area which also happens to directly coincide with the projected ATR (Average True Range) lows for Wednesday and a solid Fibonacci confluence. The cross however does have the tendency to overshoot with Tuesday’s lows by 141.50 seen as a good level for stop hunting. We will therefore look to buy a break of the 141.50 lows in anticipation of a quick reversal back above the rising trend-line support after stops have been taken out. Strategy: BUY @141.00 FOR A 145.20 OBJECTIVE, STOP @138.90. Stops to be trailed to cost on a break back above 142.00. If trade triggers and 142.00 not broken, position to be closed out at NY close (5pm ET) on Wednesday. Recommendation to be removed if not triggered by NY close on Wednesday.
Written by Joel Kruger, Technical Currency Analyst for DailyFX.com
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