GBPJPY has been moving sideways between 151.65 and 164.10 for more than three months now, which has probably made trading this pair extremely difficult. Just when you thought you finally know where GBPJPY was going, it decides to change its direction again. The best way to trade in such a directionless environment is to not trade at all and wait patiently for the market to reveal its true intentions, by forming a recognizable pattern. The waiting was worth it, because now the daily chart of GBPJPY appears to be showing some clear formations.
The daily chart makes the entire sell-off from 195.86 visible. According to the Elliott Wave Principle, it is a five-wave impulse with a missing fifth wave. If this is the correct count, the hesitation we witnessed during the last three months looks like a triangle in wave (4). This means that as long as the top of wave “c” of (4) at 162.80 holds, GBPJPY could be expected to decline below 151.65 in wave (5). Nevertheless, instead of getting over-excited once the new bottom is reached, the bears should be very careful, because every impulse is followed by a three-wave correction in the opposite direction. In other words, we should probably see 151.00 but do not hurry selling then, because the start of a significant recovery in GBPJPY could be just around the corner.
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