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