GBP/JPY: The Bears Are Back In Town
Good morning traders!
The monthly candle on GBP/JPY close shows that price tried to push higher during April but momentum failed towards the late stage of the month. We have seen some very clear sideways price action since March, however we find price to be within a descending triangle pattern. This is extremely clear on the daily timeframe with Lower Highs being made consistently.
More recently we have seen price fall from 147.000 all the way to our base level of 143.800 (320 pips). Since then we have retraced to our favoured fib level of 61.8% (145.775) and also our trendline for a 3rdtouch. At the time of writing we have seen a clear rejection of this level for a sharp 50 pip sell off indicating the bears are back in town and ready for the next move lower.
Brexit is still up in the air at the moment with no clear answer on what the U.K’s position on leaving will be. Talks are continuing between PM May and the labour party to try to make an agreement in order to get Brexit passed, however reports are indicating that this will fail which will negatively affect the pound. So be sure to keep an eye out for Brexit related news.
I anticipate another retest of 145.650/750 before finally moving lower towards our target region of 141.775 which aligns with our Fibonacci extension (-61.8%) adding extra confluence for our bias. We have a great opportunity on this trade with amazing risk to reward and potentially 400 pips to be made. Remember as always to remain patient within the market and disciplined with your trades. Let us know your thoughts in the comment section