A new market looks very interesting for a massive Bull run - GBP/JPY

[Mercury]

When waiting for my usual markets to resolve and crystalise and thereby offer up some decent trading opportunities I amuse myself by looking at new markets.  I have several Triads that I regularly look at so I thought I'd complete the GBP/USD/JPY Triad by adding the final leg.

 

With GBPUSD having been in a long term Bear and USDJPY the same it is not surprising to find a long term Bear in GBP/JPY.  Most people seem to think GBP is heading down post Brexit but we have had some short term strength.  Most also expect the Yen to continue to strengthen vs the Dollar but I think we are due a USD rally.  What is interesting about GBYJPY is that, similar to USDJPY, it has been in a Bear move since the late 70s/early 80s and appears to have made a bottom and all time low in the past few years, in fact both of these pairs did so around end 2011 beginning 2012.  Additionally both made strong 1-5 bear trends down to this bottom and then put in a wave 1 up (also in 1-5 form) and are now probably in a wave 2 retrace prior to a very strong bull run.

 

What is very interesting about GBPJPY for me is that this retrace looks set to retest a double bottom iceline from 2011/12 that also coincides with the Fib 88%.  The wave B down is performing like a 1-5 with an extended wave 5 and the market appears to be in a small time frame wave 4 retrace back up just now.  A turn anywhere between now and the underside of the 76% Fib would constitute that Wave 4 conclusion and then a bear run down to the Fib 88% to conclude the large scale Wave B would be the call.

 

At this point a rally would offer the chance to get in on a very, very long bull run, coinciding with a fall in GBPUSD and a rally in USDJPY, both of which are on my long term road map.

 

Here are the charts, let me know what you think!

 



[donaldprice]

Interesting post Mercury, ironically was looking at this last week, but as you know performing analysis on any pair, can take a good deal of time, therefore charts I have posted are a rough guide at present. Although I am not presently heavily into currency triads, I am doubtful that we have seen the completion of W-5, although their could be a truncation of W-5 back in early august. The 4 hourly chart also suggests that between the period of 27 june and 15th july we where in an ABC bear market flat, which therefore leads to W4 completion, thereafter we are still  W5 in presume. In relation to $ yen as stated in previous posts, from what I can make out, we are in W4 of W5 retrace at the moment. Therefore I would want to see more confirmation of this, but then again I have only got a draft below, so forgive me if you see some inaccuracies lol.

 

[Mercury]

Possible turning point back down for a final bear leg of this move?

 



[donaldprice]

Hi Mercury, glad to hear you are still following this. I think we may have a small retrace to complete W-4 of C before we have one more leg higher towards the 61% level of which is linked to the beginning of the previous main bear trend (W3) or which then will complete W4. I would wait for it to make a higher low before the bear trend is confirmed to resume. Let me know if you have similar or different conclusion.

[jbtrader]

Hey Guys,

 

I bought this yesterday at 134.90

I think we will see 138+

All Yen pairs look strong

 

Cheers,

 

JB.

[Mercury]

Agree  but the reverse is also true and possible in that Yen goes back up while GBP continues its retrace for some days and then both go down vs USD as the USD rally gets underway.  The pivotal point is the tramline resistance on USDJPY, as you pointed out.  In fact I am only interested to trade this pair on completion of a major reversal signal and the start of a long term trend, which I believe will be up, but perhaps not just yet.

 

USDJPY on the other hand, could be a nice trade either way after this pivotal point.

[Mercury]

Similar to the EURJPY, this pair has held my interest while others have been in complex moves.  Here we see a much more simple set up approaching the end of a Wave 2 retrace and setting up for a long sustained rally phase.  For now I am Short and got a boost from the weakness in the GBP on Friday.  I think this will continue through to FOMC and then the Yen will strengthen more than GBP pushing GBPJPY down to a turning point before the long term rally.

 

On the Daily chart you can see the set up has turned where I had previously suggested it might and is now on its way back down towards the Fib 88% and Ice line retest, which would conclude the wave 2 retrace and a turn here would be the start of a major rally.

 

On the 4 Hourly you can see 2 possible short term bearish scenarios whereby the market either falls sharply through the support zone it is coming up on or puts in a short rally and retest of the Triangle break.  Either are eminently possible, watch USDJPY for clues.  I would suggest a confirmed break of the support zone is a shorting opportunity as is a retest of the Triangle but the real opportunity is the eventual strong rally.  Obviously it will not happen as soon as I have indicated with the road map arrows, that is just for illustration.

 



[donaldprice]

Here I would be watching very closely the 0.88% level on the weekly time frame. As similar to USD:JPY, this is most likely bracing itself for a strong rally. At present of course we are finishing W5 of C therefore one can play this pair, but as with the USD; JPY it will be short lived, therefore fib levels will be your friend in this case, if in order to play this safe and manage risk.