GBP/JPY Resolving a Diamond Pattern

\ 7:49 AM EDT \ November 28th, 2012
Forex Technical Update

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GBP/JPY 4H Chart 11/28/2012 7:47AM EST

GBP/JPY 11/28/2012 4H chart

Consolidation: The GBP/JPY has been in key bullish developments recently, breaking above a declining trendline that went back to April 2010. This developed in a sharp manner from November’s low at 125.66 to the month’s high at 132.24, after which it started to consolidated in what can be interpreted as a  “diamond pattern”, expanding first, and then congesting before breaking to the downside.

Retracement: The first retracement target should be the 129.84, 38.2% retracement level to 130 psychological handle. Holding the retreat at or above this area is a clear sign bulls are in charge, especially if the 4H RSI holds above 40. A deeper correction can take the pair down to 128.24-129.04 area (50%-61.8% retracement). A break below 129.00 might shelve the bullish outlook from the breakout, but there should probably be more development before we can call it a bearish market. For now, I am sticking with the breakout, and looking for bullish continuation after a good retracement.

Fan Yang CMT is a trader, educator and a Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

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