GBPJPY Confirms Double Top Chart Pattern Below Ichimoku
GBPJPY Confirms Double Top
After Friday's flash crash, the British pound attempted a correction during Sunday night trading. However, the GBPJPY confirms Double Top chart pattern on the daily chart while remaining below the Ichimoku cloud. What could be expect next? Read on for an Invest Diva Diamond Analysis.
GBPJPY Confirms Double Top Chart Pattern Below Ichimoku - Kiana Danial with Capital Index
Technical Analysis - GBPJPY Confirms Double Top
The GBP/JPY pair broke below a Triangle chart pattern as well as a Double-Top pattern neckline on the daily chart on Friday. This happened as the British Pound dropped like a hot rock on Brexit anticipations. While the pair attempts to correct some of the losses, it already opened below the triangle on Sunday's Sydney session. This could indicate further declines in the coming days, especially since the pair remains below the Ichimoku cloud.
Long Term View
The GBP/JPY pair is below the Ichimoku cloud on the monthly chart as well. Further, it has yet to complete a cycle back to lows of 2012 at 120.
So this could also be yet another signal that the pair could drop a bit further before (potentially) bottoming out.
The US, Canada and Japan are on a bank holiday today so we could expect less volatility on the USD, CAD and JPY crosses. However early during the London session we do have the Swiss Unemployment Rate at 5:45 AM GMT, followed by German Trade Balance at 6 AM. During the next day’s Asian session Japan’s Current Account will be out at 11:50 PM GMT, which could have an impact on the GBP/JPY pair.
How to ethically "steal" from a bank - Get FREE e-Book
Bank of England (BoE) officials are scheduled to speak over the days ahead. This could cast additional pressure on Mr. Pound. However, Friday's flash crash in the GBP may encourage the central bank to endorse a wait-and-see approach for monetary policy as it heightens the risk of overshooting the 2% target for inflation.
Trading Strategy - GBPJPY Confirms Double Top
Market sentiment is pretty mixed at the moment as many traders are jumping on bullish positions to ride the potential GBP/JPY correction beginning of the week.
Bullish Scenario: Short term bullish targeting 129.50
For long-term bullish, we need a break above 135 pivot and the Ichimoku cloud first.
Bearish Scenario: Entry point: 129:50
Target: 125 and 120 in extension.
Both scenarios are pretty high risk and are only recommended to traders with high risk tolerance.
Here are Invest Diva's calculations for important USD/USD approximate levels to keep an eye on from a long-term perspective:
|Support Levels||Turning Point||Resistance Levels|