GBP/JPY Stalking Pullback for Confirmation

• 4H and 1H: 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. There was a third attempt that never made it close to the top to create a triple top. Instead the market came sliding down in 2 waves of equality. Being that this completes an AB=CD retracement pattern at the 61.8% level, we can expect a bullish attempt.
• That is what we have now, a rally after a bearish signal. This is a pullback, from which we can get clues to whether a decline is to follow. If the market rallies above 1.3360, it is less likely the market will continue lower towards the 131.30 area, the support of a recent sideways range.
• Instead, if the rally picks up momentum, it may go to the 136 resistance area.
• The market is in the middle of the range right now, so I really don’t have an opinion in the near-term move, though if 133.60 holds, I would believe a decline towards 131.30/50 is possible.

Fan Yang
Currency Analyst
Commodity Trading Advisor

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