Today’s focus will be on the GBPJPY! So get your reading glasses and a cup of tea for this in depth analysis! Today’s article will be a great guide for your Forex trading plan!
First, let us start with a quick recap of the majors to get an idea which direction the crosses could be headed to.
1) The USDJPY has been fighting to reach higher grounds for quite a while now but it has not been able to crack the 94.50 resistance level.
This level actually was already viewed as a potential barrier for this currency pair in this article: Yen 110?
Basically, the longer the currency stays under that high, the more likely a deeper correction on the UJ will indeed take place.
Of course a break 94.50 should clear the road for a further continuation to at least the 100 level. Read more details on the UJ in this Forex trading strategy article.
2) The GBPUSD has been indeed making that down move as we at winners edge trading were anticipating. The GU is in its 5th wave on the 4 hour and day chart. Also the Cable finds itself quite close to the weekly support areas of 1.5250-1.5350.
A bounce from this horizontal weekly support level is quite likely as it has acted as strong support in the past as well. In fact, the last time that the GU was lower than 1.5250 price level was approximately 2,5 years ago. Therefore, the chances that price will break through such an important price level are slim.
From this analysis we can anticipate downside continuation on the GU until we reach weekly support and downside correction on the UJ until we break the high or reach a big retracement level.
Enough discussion about the majors….
Now its time for… the Ferrari of all currencies: the GBPJPY!
Of course the daily and weekly chart both show a huge impulsive move up, just like any Yen cross.
It is interesting to note however that recently price action to the upside has halted somewhat. It seems that the GJ is making a bigger correction.
The questions are:
– Will the up trend continue?
– And if so, when and from where?
There are interesting questions. If we look at the Elliott Wave count on the day chart, the likelihood of more continuation is quite high in my opinion. Of course this analysis could change 2 weeks from now depending on the price action information we receive. But the likelihood of a wave 4 and 5 are quite high.
This of course leads us to the question, where would wave 4 end and wave 5 continue?
That question is best answered by a Fib! If we place a Fibonacci retracement on the potential wave 3, we can see that price has already retraced back to the .236 level. A 382 Fib however is considered the normal retracement level for a wave 4.
We also see 2 bottoms at the same price level (+/-139.30), which could act as support.
The wave 5 target is the double top and the -0.272, which is at 153.80. I myself will be keeping a hawks eye on price action clues that indicate a turnaround anywhere in that area.
Until we reach the 382 Fib I do think further downside corrections is possible, but one should be careful when trading against such a strong trend. The preferred trade is catching the wave 5.
Thanks for reading and looking forward to hearing your opinion and feedback!
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