close icon

GBPJPY Unmoved by Brexit… For Now

GBPJPY climbed to its highest point in over a year yesterday, despite Brexit negotiations not going in the best possible way. The pair has been in recovery mode since October 2016, but its chart is looking quite heavy, not because we expect Brexit to eventually take its toll on Britain’s economy, which is also very likely, but because there is an Elliott Wave pattern that spells trouble over its currency. Take a look at it below.

gbpjpy elliott wave analysis

It is a combination of patterns actually. First, there is a five-wave impulse to the downside from 195.89 to 124.69. The structure of wave 3 of (3) is interesting, because one part of wave (iv) overlaps the bottom of wave (i). Under normal circumstances, this is a violation of the rules, but in that case, wave (iv) is a triangle, whose orthodox end is wave “e”. Wave “e” does not overlap wave (i), so there is no violation of the Elliott Wave Principle’s rules.

Naturally, the impulsive decline was followed by a three-wave corrective recovery to 152.95 so far, which seems to be almost over, thus completing the entire 5-3 cycle. The corrective rally takes the shape of an (a)-(b)-(c) simple zig-zag retracement, whose wave (c) looks like an ending diagonal. That is the pattern, which is most worrisome, because according to the theory, ending diagonals are followed by a “swift and sharp reversal.

If this count is correct, GBPJPY is already searching for a top. However, the bearish reversal would only be confirmed, if we see a breach of the lower line of the ending diagonal wave (c). Until then, the bulls remain on the wheel.



Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

USDJPY Changes Direction Twice in Two Days

It has been a volatile week for USDJPY. The pair started the session on a positive note and rose to 111.76 on Wednesday. However, instead of keeping up the momentum the bulls quickly exhausted their options and allowed the bears to breach the previous swing low at 110.69 and drag USDJPY down to 110.38 on…

Read More »

Emerging Markets Crisis Not to Blame for EURUSD ‘s Drop

Following several very strong days that saw EURUSD appreciate from 1.1300 to 1.1734 between August 15th and 28th, the European currency is under pressure again. The pair is currently hovering under 1.1590 after a decline to 1.1530 yesterday. As usual, it did not take very long for the after-the-fact explanations for the Euro’s weakness to…

Read More »

As USDJPY Plunges, Ralph Elliott is Smiling Somewhere

It has been a wild ride for USDJPY traders last week. The pair opened at 111.31 on Monday and rose to 111.83 on Wednesday before crashing to 110.69 by Friday. It still managed to close the session above the 111.00 mark, but that is hardly a big relief for breakout traders, who thought joining the…

Read More »

Elliott Wave Pattern Sent EURUSD Higher, Not Trump or Cohen

What a week for EURUSD bulls! The pair is moving sharply up after weeks or even months of suffering. After opening at 1.1437 on Monday, the European currency climbed to almost 1.1623 against the U.S. dollar, before retreating to its current whereabouts near 1.1560. It is interesting to note that Donald Trump’s trade war, which…

Read More »

Riding EURUSD ‘s 1100-Pip Elliott Wave Crash

The way the year began gave EURUSD bulls a lot of reasons to hope for a great 2018. On February 19th, the euro was trading above 1.2400 against the U.S. counterpart, following a phenomenal 2017. Angela Merkel had just successfully negotiated the terms of her fourth mandate as a Chancellor of Germany and Donald Trump’s…

Read More »

Japanese Yen Refuses to be the Dollar’s Latest Victim

Last week, when most major currencies like the euro, the Canadian dollar and the British pound (not to mention the Turkish lira) fell against the U.S. dollar, one currency managed not only to hold its ground, but to actually gain some against the greenback. The Japanese yen ‘s rise dragged the USDJPY pair down to…

Read More »

Two Months Ahead of EURUSD ‘s Turkey-Driven Selloff

EURUSD’s selloff has resumed. The pair fell to as low as 1.1432 earlier today, following a Financial Times report stating the European Central Bank is concerned about some European banks’ exposure to Turkey’s currency crisis. Spain’s BBVA, Italy’s Unicredit, and France’s BNP Paribas were among the big names mentioned in the report. Now, let’s see how…

Read More »

More analyses