Potential GBP/JPY Double Bottom at 126.80?

Last updated 9/7/2010 1:56 PM EST (GMT -5) 4 Comments

FX360 Technical Analyst Staff

Technical Analyst, GFT

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An opportunity to buy the GBP/JPY may be close at hand if prices drop to 126.80. This level marks the completion of a bullish butterfly on the 4hr chart and is defined by the following support levels:

  • 141.4% of XA
  • 161.8% of BC
  • ABCD pattern
  • 161.8% of YZ on daily
  • Significant, 19-month low on daily

    • The stop for this trade is placed at 125.50, just beyond the 161.8% XA extension and the significant daily low. The target is placed at 61.8% of the projected AD leg, which is also 38.2% of the projected ZD leg on the daily chart (see below). The pair must remain below 131.64 for this recommendation to remain valid.  Assuming the trade enters, readers should keep an eye on the U.K. Manufacturing Production report (Wednesday at 8:30 GMT) and the BOE rate decision / statement (Thursday at 11:00 GMT) as potential sources of event risk for the pair.

    Potential Strategy: Buy GBP/JPY at 126.80, risking 125.50 and targeting 130.83

    Comments (4)

    NeoFX
    September 07, 2010 at 03:49 PM ET
    Roger,

    that EUR/USD sell was a great call!!! Thank you.

    I rode it till the end and actually just went the other way and bought it off of that 78.6% @ 1.2690.

    Neo
    FXDragon
    September 08, 2010 at 12:51 AM ET
    Yes Roger very good eurusd trade. So, would you consider going long now? Since you mentioned it ‘temporary trend reversal’ if i remember correctly.
    rstojsic
    September 08, 2010 at 06:23 AM ET
    thanks guys. i personally wouldnt go long now
    DeKev
    September 09, 2010 at 01:45 PM ET
    Hi, any idea or article that I can refer on how can I draw the fibo line of the 4hr chart with 61.8%, 161.8% and 141.4%?

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