GBP/JPY is expected to trade with a bearish bias. The pair broke above its 20-period and 50-period moving averages, while the relative strength index is above its neutrality level at 50. Nevertheless, 128.25 represents a significant key resistance level. We are cautiously negative now.
The British pound weakened to 1.2112 against the greenback after Northern Ireland's High Court ruled that the consent of the regional parliament was not required to trigger Britain's exit from the European Union.
As long as the key level at 128.25 is not broken up, we keep our negative view unchanged with down target at 127.40. A break below this level would call for a further drop toward 127.00.
The pair is trading below its pivot point. It is likely to trade in a lower range as long as it remains below the pivot point. Short positions are recommended with the first target at 126.55. A break below this target will move the pair further downwards to 126.10. The pivot point stands at 127.35. In case the price moves in the opposite direction and bounces back from the support level, it will move above its pivot point. It is likely to move further to the upside. According to that scenario, long positions are recommended with the first target at 127.70 and the second one at 127.95.
Resistance levels: 128.50, 128.85, 129.45
Support levels: 127.40, 127.00, 126.60
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