Dear Traders,
the Great British Pound (GBP) is struggling at the moment as its rebound up seems corrective in nature.
Also the Japanese Yen (JPY) is unable to continue with its trend for the moment, as the USD/JPY keeps failing to break above the 115 resistance zone.
What does this mean for the GBP/JPY? Time for a closer look.
There are two main reasons why I am expecting a larger bearish correction on the GBP/JPY.
The failure to continue with the uptrend for that long indicates a lack of momentum and a larger ABC zigzag therefore seems likely.
The confirmation of the wave C is a daily candle close below the channel.
As always keep in the mind the rules for measuring breakouts with candlesticks:
The GBP/JPY has alraedy broken below the support trend line of a smaller 4 hour bullish correction.
The bearish breakout however still has daily support in front of it. Although a bearish setup now is acceptable, traders would need to manage their short setup very closely when price gets closer the daily support trend line.
The real long-term breakout remains best visible on the daily chart but the start of that breakout could be occuring now on the 4 hour chart.
Good Trading,
Chris Svorcik
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