Dear traders,
the GBP/JPY has been showing very strong bullish momentum. But it might be time for a pullback with a divergence pattern visible on the daily chart.
This article will review the Elliott Wave and FIbonacci patterns and discuss the main scenarios for the upcoming weeks.
Price Charts and Technical Analysis
- The GBP/JPY bullish impulse is typical for a wave 3 (purple) impulse:
- The divergence pattern between the tops (purple lines) is indicating the uptrend is running out of steam. A reversal might occur now or soon.
- A bullish breakout above the smaller bull flag chart pattern, however, could indicate one more push up (green arrows) and a higher high.
- The main bullish targets are located at the 157.25-50 and 159.35-160 target zones.
- Whereas a bearish breakout (orange arrows) below the support trend line (green) and the 21 ema support zone could indicate a bearish retracement.
- The retracement is expected to create a bearish ABC (pink) pattern and is aiming at the Fibonacci retracement levels of wave 4 (purple).
- The most common Fibonacci Fibonacci levels are the 23.6% and 38.2% where a bullish bounce (bullish arrow) is expected.
On the 4 hour chart, price action is still in an uptrend because the price is above the 21 ema zone, which is above the 144 ema, 233 ema, and 610 ema:
- The bull flag chart pattern indicates the potential for more upside before the divergence pattern on the 4 hour and daily charts has an impact.
- A breakout above the flat (green arrows) could confirm the uptrend and the wave 4-5 (grey) pattern.
- Price has already made a bounce at the 38.2% Fibonacci level. But a break below it could indicate a reversal instead (orange arrows).
- The odds of a bearish or bullish breakout seem to be about 50-50% so waiting for the actual breakout to take place could make sense.
- With a bearish breakout, the larger bearish retracement on the daily chart could begin.
Good trading,
Chris Svorcik
The analysis has been done with the ecs.SWAT method and ebook.
Elite CurrenSea Training Program(s) should not be treated as a recommendation or a suggestion to buy or sell any security or the suitability of any investment strategy for Student. The purchase, sale, or advice regarding any security, other financial instrument or system can only be performed by a licensed Industry representative; such as, but not limited to a Broker/Dealer, Introducing Broker, FCM and/or Registered Investment Advisor. Neither Elite CurrenSea nor its representatives are licensed to make such advisements. Electronic active trading (trading) may put your capital at risk, hence all trading decisions are made at your own risk. Furthermore, trading may also involve a high volume & frequency of trading activity. Each trade generates a commission and the total daily commission on such a high volume of trading can be considerable. Trading accounts should be considered speculative in nature with the objective being to generate short-term profits. This activity may result in the loss of more than 100% of an investment, which is the sole responsibility of the client. Any trader should realise the operation of a margin account under various market conditions and review his or her investment objectives, financial resources and risk tolerances to determine whether margin trading is appropriate for them. The increased leverage which margin provides may heighten risk substantially, including the risk of loss in excess of 100% of an investment.
Recommended Content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.