GBPJPY: Retraced to our favoured buy-zone

ASIA ROUNDUP:

• AUD Consumer Confidence Index rose +1.9% to 94.9 in July. AUDUSD traded back up to yesterday's highs but retraced back towards 0.94 leading up to the employment data.

• China CPI came in slightly less than expected by 0.1% at 2.3% but the markets hardly reacted as

UP NEXT:

• CAD Housing Starts expected to be slightly slower but still healthy at 191k. This is considered a leading indicator of construction so a positive reading (and above expectations) is generally good for the CAD.

• FOMC minutes will be closely scrutinised by traders later today

• GBP House Price Index is forecast to have slowed slightly by -0.3%. However last month’s +3.9% was at decade highs, so a negative number means the rate of growth has declined, ever so slightly, from the highs. Only a significant number below expectations should be GBP bearish.

TECHNICAL ANALYSIS:

GBPJPY: Retraced to our favoured buy-zone (one dip lower would be better though...)

Following the breakout last week GBPJPY has retreated towards a buy-zone between 173.50 - 174. I am favouring another dip lower before the uptrend resumes because we are now trading beneath the weekly pivot (likely resistance upon first visit) and we have not yet tested the lower channel line. Another reason is this correction seems a little short in time and price compared to the previous decline.

A break below 173.50 would then target the monthly pivot around 172.50 and bring us back within the bullish triangle breakout. Under this scenario I would prefer to stand aside, or only consider short opportunities on much lower timeframes until a clearer trend has been established.

Please view previous analysis for a larger picture:

• GBPJPY en route to 179?