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GBP/JPY clinching to weekly highs at 174.50

FXStreet (Moscow) - GBP/JPY is keeping close to previous week’s high at 174.50 after a short-term dip below 173.00 on Tuesday. Currently, the cross is trading at 174.44.

The correction is ripe

Weekly chart of GBP/JPY is fascinating. The cross gained about 450 pips, while a long white candle from the previous week swallowed most of the downside movement since early July. From the longer-term point of view GBP/JPY bumped against a long-term resistance area of 174.50-175.10. The chances are that the cross will revert at least to the middle of the range. There are several fundamental factors to support this idea: JPY has paused after its massive sell-off across the board and now may be ready for a healthy correction, while GBP dynamics is taking centre stage due to nearing Scottish referendum. Macroeconomic data published today, namely BoE minutes and labour market statistics might increase the downside pressure on the British currency. Watch out for 174.00 support. once the cross closes below this level on daily basis, the downside may be extended towards 173.00/172.90 area.

What price levels and patterns have to be considered?

Current price is 174.44, with resistance ahead at 174.48/49 (Daily High and Yesterday's High), 174.63 (Monthly High and Weekly High) and 174.91 (Daily Classic R1).

Support below can be found at 174.37 (Daily Open), 174.15/14 (Daily Low and Hourly 20 EMA), 173.95.

Regarding candlestick formations, we can see Piercing Line formation on the 4-hour/

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