Get ready for a special Forex advice on the Ferrari, also known as the GBPJPY, and the EURJPY.
After yesterday’s extensive FX analysis on the USDJPY, it is time to use that trading knowledge to our advantage and look at the Yen crosses.
As we all know, this currency pair has made a huge 2,200 pip rise since mid November, increasing in value from 125 to 147.
However, ever since mid February the GBPJPY has been correcting that uptrend. And it has done so quite impulsively dropping a whopping 1,000 pips.
The currency is now slowly but surely moving up again. Questions:
1) Does this mean that the uptrend is back in full force?
2) Or is this part of the correction and can we see one more impulsive move down?
A key level to keep an eye on is 145. On the day chart we can see that there is symmetry in the market with previous resistance levels.
Once that level gets broken, it could indicate the full fledged start of the uptrend. Of course we will have some resistance to the upside, such as the top and and the fib level 786. These are still areas where a bigger downward correction could start.
If the currency does remain in the uptrend, then we can clearly see that the GJ respected the 382 Fibo level of the swing high swing low to the upside on the day chart. This is most likely a wave 3 and a 382 retrace is very typical for a wave 4.
Once the uptrend is back in motion, the target for that swing trade to the upside is the -0.272 target at +/- 154. Not a single trader would want to miss that move!
One thing to keep in mind is this simple reality: as long as the currency pair is above the support trend line, then we should expect this trend to keep marching to the north. Especially since we are now breaking the triangle.
The EURJPY is showing similar bullishness. The currency made an impulsive move up 1 week ago and has been correcting slightly downwards on the 4 hour chart.
1) The recent 2 days of price action were showing a falling wedge type of correction. This is a bullish reversal pattern.
2) Also the EJ is making clear higher highs and higher lows. The single line trend line is nicely confirming the uptrend price movement.
Furthermore, the day chart looks to be confirming the bullishness:
a) Price action is confirming that momentum with a break of the down trend lines.
b) We can see higher highs and higher lows as well
c) There is a trend channel moving neatly to the upside
Both charts also upward momentum and power on 4 hour and day chart lining up for more bullishness. And there is no divergence to be seen.
These are strong signs of sustainable trend continuation.
Breaking yesterday’s day candle high at 125.20 and the current top at 126 is definitely important. Those levels can still act as resistance and the currency could in fact correct deeper before moving up. This is something that all traders should be careful of.
However, as long as the the up trend channel remains intact, then the chance of the up trend continuing is for sure significant.
If this trend does continue, then the top at around 128 always is an obstacle and a potential for resistance. But otherwise the currency could be well set for reaching its -0.272 target at around +/-135.
Both currency pairs seem well setup for trades to the upside, in line with the UJ up trend as well. In any case make sure to be careful of resistance levels along the way! And if trading these pairs, try to go long close to support levels. We will keep you updated whether the bullish view remains in tact via twitter.
We hope that you have enjoyed this free Forex advice!
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