Beast Could be Ready for Correction
For couple of months now, the Japanese Yen has been going through a period of weakness. All currencies rallied strongly in relation to the JPY, gaining hundreds, even thousands of pips in some case. The GBP-JPY, or beast, for example, advanced from 117.26 to as high as 133.47 today. This is a sharp move and probably overextended to some degree, which suggests a possible correction soon. Incidentally, this true is to all JPY crosses. It is probably too early to look for trades using daily charts, but shorter-term graphs are showing signs of correction/reversal.
The beast started to indicate reversal on the 15 M chart, which I discussed here yesterday. My plan was to sell it at 132.20, with objective of 60 pips. The price continued higher and I kept moving the sell order to just under the latest minor low. At last, in earlier trading today, the price dropped sharply lower, filling mu order at 132.91. The objective remained at 60 pips and it was reached short time ago. Now it is time to look at a little larger-scale chart and see if another selling opportunity presents itself there.
On the hourly chart, the GBP-JPY appears to have found support at around 132.20. I would like to see a small rebound from here, lasting at least several hours. If that happens, new low would indicate shorting opportunity with objective of about 70-80 pips. At the same time, the daily chart of GBP-JPY is showing a possible bearish reversal candlestick pattern, but we must wait for the day to close before taking it into consideration. I will try to cover that development in the next post.