The British pound is trading lower against the Japanese yen, as the recent economic data in the UK came as a disappointment. There were also some signs of risk aversion noted in the market, and that was probably the reason for more downside in the GBPJPY pair, as the Japanese yen gained heavily recently. The pair earlier during this week broke an important support area, which led to more losses in the pair. The UK trade balance data was also published during today’s London session by the National Statistics. The outcome was again on the disappointing side. So, there is a lot of bearish pressure seen on the GBPJPY pair.

There was a critical bullish trend line formed on the 4 hour chart for the pair, which acted as a support on a number of occasions. The mentioned trend line was broken earlier during this week, which ignited a down-move in the pair. Currently, the pair is trading around an important support level at 170.70-60. So, there is a chance that the pair might correct a bit higher from the current levels in three waves. In that situation, the 50% fib retracement level of the recent drop from the 173.50 high to 170.70 low might act as a hurdle for the pair, which almost coincides with the broken trend line.

On the other hand, if the pair fails to trade higher and moves lower, then a test of the 170.00 support level might be possible in the short term.

Overall, buying looks risky at this point of time, so selling rallies around the 171.50-60 resistance area might be a good option.

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Posted By IKOFX Technical Team: Online Forex Broker

Website: http://ikofx.com