GBPJPY bulls got discouraged near 188.80 on November 19th. The sell-off, which followed, led the pair to 184.32 just five days later. Since then the exchange rate has been very difficult to trade, making higher highs and lower lows all the time. However, it seems the market is finally giving us a clue on the hourly chart of GBPJPY.
The above shown chart shows a five-wave impulse, followed by what we could call a double expanding flat correction. Flats consist of three waves, labeled A-B-C. It appears wave A of the flat is also an expanding flat itself, labeled (a)-(b)-(c). According to this count, the 5-3 wave cycle points to the south, which means we could expect weaker GBPJPY from now on. And if this is not enough, there another equally probable count, suggesting the same thing. You can see it on the chart below.
The shape of the post-sell-off recovery makes us think about an expanding triangle, following the five-wave decline. If this is the correct assumption, wave E is either over or near completion. According to the Elliott Wave Principle, both counts prepare us for a significant move to the downside. The only difference is in the labeling. With first targets standing below 183.90, there is a good chance for a 220+ pip slump in GBPJPY.
