GBP/JPY Retracement Pattern
- 4H: The GBP/JPY pair has been slowly climbing the last 2 weeks. The Friday Asian-European session however started to retracement this rally from 138.30 to 143.60.
- The retracement actually started with the 2-bar reversal at the 143.60 top on the Feb. 17th session.
- Now a second leg of the retracement is underway and is projected to the 140.00 area 61.8% retracement. The stochastic is is reflective of a full retracement as well, the type of typical wave II.
- Daily: The opposite scenario is a break below, and a continuing decline, which would confirm a breakout in the daily time-frame.
- Looking at the daily, we see that the recent 2 weeks of rally brought the pair to the 38.2% retracement before the full retracementin the short-term occurred.
- Note the 143.60 powerline that held as well as stochastic crossing back down. These are very bearish signals, and since the overall market has been bearish, this is a more likely case.
- A good way to confirm is to wait for the market to decline further into the near term fibonacci retracement levels, such as 78.6% at 139.40.
- Weekly: If the price action continues to be strong, and breaks below retracement zones, wait for a pullback to give one last confirmation, then the outlook can be bearish in the intermediate term.
- Some projections can be seen in the weekly. Swing projections to 130.00 area is coincident with the retracement zone between 61.8% and 78.6%.
Commodity Trading Advisor