Published On: Thu, Mar 2nd, 2017

Seeking dips in GBPJPY for long-term base

InstaForex

Background


We have been trying to find a good pattern for GBPJPY for some time now. Here is why we now look to buy into dips.

Monthly – Bullish inverted hammer posted on the long-term chart. Two spikes then an inside Harami highlighting a lack of current clear direction. Cloud resistance seen at 153.30.

Source: Saxo Bank

Weekly – The pair has completed five waves (Elliott Wave) at 120.00 and is now assessed as being in the corrective leg higher AB=CD. Levels under 139.73, the Marabuzo level from the week of January 16, continue to attract buyers, which is important.

Source: Saxo Bank

Daily – Broke out of the wedge formation to the upside. The measured move target is 160.00. The main question to ask here: “is the right shoulder complete?” 

Source: Saxo Bank

Intraday (six-hour) – The move lower is mixed and volatile, which is common in corrective formations. Levels close to the Fibonacci confluence area of 139.61-139.24 found buyers. Expanding wedge offers an eventual upward bias, but a break of 141.46 is needed to confirm.

Source: Saxo Bank  

Intraday (30 minutes) – Holding within a channel formation with levels close to the 61.8% pullback of 139.53 finding buyers. However, there is scope for a deeper correction (we think, as JPY strengthens) to move towards the Fibonacci confluence area at 139.20. 

Source: Saxo Bank

Intraday (bullish Gartley) – A move to this level (139.20) will form a bullish Gartley and the right shoulder of a possible bullish reverse head-and-shoulders pattern. This offers a great long entry for a potential medium to long-term play.

 Source: Saxo Bank

Correlation

GBPUSD – Close to the 61.8% pullback level of 1.2255 (from 1.1978 and 1.2704) and the AB=CD formation target (1.2222). Limited downside. 

Source: Saxo Bank

USDJPY – Moving higher towards the AB=CD formation target at 115.00. This leg should be in three waves, so a correction lower soon is due. There is nothing to say it will not extend past the target area. 

Source: Saxo Bank

Management and risk description


A break of 141.20 stop to entry

Parameters

Entry: Buying GBPJPY at 139.30

Stop: 138.70

Target: 153.00 and 160.00

Time horizon: short-term entry (1-2 days or void), long-term target

— Edited by John Acher

Non-independent investment research disclaimer applies. Read more
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