 Yesterday’s interpretation of a positive reversal anticipated a rally after a correction. The market indeed continued to rally, and an impulse wave is born. I will look at the internals in the chart below, but first from the chart above, I want to note that the market broke.. |
 The GBP/JPY started the week rallying towards 135.60 and was rejected there. There was a bearish divergence, and we see that materialize for about 100 pips. This brings the market back to the level it started this week and tests… |
 I want to introduce a technical indicator that was added last month in the latest VT Trader release. It is called the choppiness index and without getting into the details, it is similar to the ADX in that it helps identify choppy ranging action versus sharp trending action. Of course a lag exists as with any indicators… |
 The 4H chart shows the pair bouncing off a 61.8% retracement level. Momentum has been ranging, but there is a slight bearish bias looking at the RSI levels in the 4H chart. The 1H RSI broke below 40 reflecting momentum of the current bearish attempt. The 1H chart shows that there was a completed double top… |
 The GBP/JPY pair may have topped off at the 133.80 level. In the 4H chart, this is the 61.8% retracement of the previous downswing. The market attempted break this level, but formed a topping action…. |
 The GBP/JPY completed a double top ahead of today’s NFP release at 8:30AM ET. This double top suggests a decline, but it can also be a flat correction to be followed by continuation. |
 Here I define a bearish RSI(14) pop as a it swings from above 60 straight down below 30 without crossing over its own 5-moving average. The bearish signal is based on the fact that the market is able to muster enough momentum… |
 The GBP/JPY pair has been “twisting and turning” for more than a month now, and has left us some “tire tracks” to examine. Going back and reviewing market action can provide insight, even though it is in hindsight. |
 The 4H chart shows that momentum may have started to become bearish. However inability for the RSI in this time-frame to break below 40 fails to confirm this. The RSI reflects price action which has been consolidating sideways, or a triangle pattern. The 1H chart shows that the rally since yesterday may be over in the form of a gartley retracement pattern. There was not exactly an ab = cd type of… |
 The GBP/JPY has shown that topping action may be complete. The RSI confirms with a crossover under its 5-period moving average. The negative reversal suggests an aggressive target of 123. However, in the short-term, the 130.45 area is the target. This is 61.8% retracement, and is also the target for the latter part of the negative reversal. |