GBP/JPY Res Test - 23.6 of the Sell-Off

9月17日

While the world waits for the Fed to kick off their cutting cycle, there's been some very strong moves showing in Yen-pairs. GBP/JPY remains especially elevated on a longer-term basis and the Bank of England hasn't exactly been hawkish of late.

There was a 2,800 pip sell-off in July-August and the bounce from that was intense, even if it couldn't quite make it to the 50% retracement level.

Bears took over again shortly after the September open but started to stall a little under 1,000 pips below that prior high with yesterday's low falling just five pips shy of the 183.72 swing.

At this point there's a resistance test at the 23.6% retracement of the July-August sell-off. I've spanned that up to a zone that runs as high as 187.96.

If we do see Yen-strength come back after the Fed tomorrow, which I think would need to come along with a dovish FOMC outing, which could be accomplished with a 50 bp cut combined with a dovish dot plot matrix, then we could see bears taking over again.

But if we see a bit of prudence from the FOMC and a continued bounce in USD/JPY, the door is open for re-test of the 190.00 handle in the GBP/JPY cross-pair. The 38.2% retracement of the sell-off plots 91 pips higher and this sets up a spot of resistance taken from prior support. - js