- The pound fails at 167.10 and returns to the 165.00 support zone.
- Below 165.00 the pair could trigger a “Shoulder-to-Head” pattern with the target of reaching 160.00 or below.
On Thursday, the pound headed south against the yen for the third day in a row, extending its reversal from Monday’s high at 169.05 to test the neckline of a head and shoulders pattern at 165.00.
The yen advanced after the US CPI data.
The slight recovery attempt seen during the Asian and early European sessions did not continue above 167-00, with the pair falling sharply during the early hours of the US session as the Yen spiked after the release of US inflation data.
The strength of the yen has led the pair to test an important support level at 165.00, where the lows of 14-21 Oct and 3-4 Nov meet the 50-day SMA.
Hourly charts show the pair close to overbought levels, which could favor a consolidation before further moves.
A confirmation below 165.00 would add to the negative pressure and send the pair to test the 100-Day SMA, now at the 164/05 zone, and the 200-Day SMA, at 162.10 before targeting the October low at 159.80.
On the other hand, the pair should break intraday resistance at 167.50 to relieve negative pressure, and extend towards 6-7 Nov highs at 167.11, clearing the way towards the psychological level of 170.00.
GBP/JPY daily chart
Technical levels to watch
Source: Fx Street
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