Is GBP/JPY Up For Reversal?
December 1, 2013 in Chart Alert
Lehman Brothers had filed for bankruptcy on September 15th, 2008 and during that month GBP/JPY had shown a volatility of 1386 pips with the month’s high as 198.31 and low as 184.45. But then which currency trader can forget the month of October 2008? During that one month GBP/JPY had moved 6101 pips. Such volatility is rare to be seen. The high of the month was 189.93 and the low was 138.92.
Once the subsequent recovery failed at 163.07, the pair had remained in the ongoing downtrend which had started in 2007 till May 2012. The upward gains which had started since then could have been just considered as a consolidation till the pair broke over 163.07. The break over 165.00 could be taken as the second milestone and also as the second indication that GBP/JPY might have already bottomed up and may be on it’s way to the reversal. Other interesting thing is that the exact level of 116.84 had given support to GBP/JPY once again in September 2011. The fact that the support had come exactly at 116.84 for the second time also supports the idea that a bottom might already be in place from the longer-term perspective.
What should be the next target?
Well, the momentum is not showing any indication of slowing down. The least what is now expected is a move towards 168.12 which will complete the 38.2% retracement of the long-term downtrend from 251.09 to 116.84. However the momentum also suggests that the pair may not only stop there but may try to take out the psychological resistance of 170.00 next. The previous resistance at 163.07 should now turn into support and if this support holds then who knows that GBP/JPY also manages to knockout 175.00 or more?
EUR/JPY also seems to be running on the same lines. Do check that at: Is EUR/JPY coming out of the reverse gear?
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