GBP/JPY Stalking Pullback for Confirmation
4H and 1H: The 4H chart shows the pair bouncing off a 61.8% retracement level. Momentum has been ranging, but there is a slight bearish bias looking at the RSI levels in the 4H chart. The 1H RSI broke below 40 reflecting momentum of the current bearish attempt.
The 1H chart shows that there was a completed double top. There was a third attempt that never made it close to the top to create a triple top. Instead the market came sliding down in 2 waves of equality. Being that this completes an AB=CD retracement pattern at the 61.8% level, we can expect a bullish attempt.
That is what we have now, a rally after a bearish signal. This is a pullback, from which we can get clues to whether a decline is to follow. If the market rallies above 1.3360, it is less likely the market will continue lower towards the 131.30 area, the support of a recent sideways range.
Instead, if the rally picks up momentum, it may go to the 136 resistance area.
The market is in the middle of the range right now, so I really don't have an opinion in the near-term move, though if 133.60 holds, I would believe a decline towards 131.30/50 is possible.