The Great Britain pound proved to be stronger than the Japanese yen after the FED’s minutes last week, when GBPJPY jumped sharply from 177.10 to 181.00. During the rest of the week the exchange rate did not leave this range. But let’s see what the chart can tell us, when looked at from the perspective of the Elliott Wave Principle.
The hourly chart of GBPJPY shows, that the decline from 185 to 177 is a five-wave impulse. According to the theory, every impulse is followed by a three-wave retracement in the opposite direction. So far, it seem we are in the middle of wave C of an A-B-C zig-zag correction. Once it is over, GBPJPY is supposed to continue in the direction of the five-wave sequence. That is why we believe, that despite the post-FED reaction, the recovery is likely to be short-lived.
