GBP/JPY Looking Into The Hard Brexit Abyss?
EWM Interactive | Jul 20, 2018 04:47AM ET
Our last update of GBP/JPY came out on December 5th, 2017. It was focused on the long-term perspective and based on the daily chart of the pair, which did not look very encouraging for the bulls at the time to say the least. While the pair was trading above 151.10, the Elliott Wave Principle suggested that a major bearish reversal should soon be expected. The Pound had been successfully ignoring the increased possibility of a hard Brexit, but we thought it was only a matter of time before the bad news catches up with the bulls.
It has been over seven months since we published this analysis. As of this writing, GBP/JPY is hovering around 146.20, following a decline from 156.61 to 143.20 that took place between February and May 2018. In order to see if the bigger picture negative outlook is still valid, we need to take a closer look at this drop. The 4-hour chart of the British Pound against the Japanese Yen will come in handy.
Obviously, the decline in question is not a five-wave impulse. Under other circumstances we could conclude it was just a three-wave correction within a larger uptrend and decide to join the bulls. The bigger picture, however, puts things into a better perspective and indicates that we are actually seeing a series of first and second waves to the south, labeled 1-2-i)-ii).
The impulsive structure of waves 1 and i) is out of doubt, while wave ii) looks like a simple a-b-c zigzag, which has been developing between the parallel lines of a corrective channel. The upper line of this channel put the bulls to rest and gave the start to what is supposed to be wave iii) of 3 to the south.
Third waves are usually the fastest and strongest part of the Elliott Wave cycle. This count suggests that as long as GBP/JPY trades below the top of wave “c” of ii) at 149.31, much lower levels should be anticipated as wave iii) progresses. It appears the bears have just been warming up so far in 2018.
Original Post
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.