- GBP/JPY bullish momentum is super strong. More than 35 daily candles have been above the 21 ema zone.
- The GBP/JPY strength is typical for a wave 3. In fact, there could be multiple wave 3s developing with the current bullish move.
- On the 1 hour chart, a deeper pullback took price back to the long-term moving average zone (144-233 emas). Price action seems to have completed a wave 3.
Can the uptrend continue even higher? Let’s review the chart patterns.
Price charts and technical analysis
The GBP/JPY strength is typical for a wave 3. In fact, there could be multiple wave 3s developing with the current bullish move. Let’s review:
- The current wave 3 (grey) is still ongoing.
- An immediate continuation (green arrows) should take price action towards the next targets at 155 and 156.50, which is the confluence of Fib targets of waves 1-2.
- The wave 3 (grey) will only be completed once price action retraces back (dotted orange arrow) to the 21 ema zone.
- A bullish bounce at the 21 ema zone (dotted blue arrow) is expected to confirm the wave 4 (grey) pattern.
On the 1 hour chart, a deeper pullback took price back to the long-term moving average zone (144-233 emas). Price action seems to have completed a wave 3 (green) and the pullback was probably a wave 4 (green). What can we expect next?
- The bullish breakout above the resistance trend line (dotted orange) is probably a wave 1 (black).
- A bearish ABC (orange arrows) could take price action lower in wave 2 (black).
- A bullish bounce (green arrows) could indicate the continuation of the uptrend.
- A bull flag pattern (grey arrows) however could indicate an immediate uptrend (dotted green arrow).
- Only a strong bearish decline (red arrow) invalidates the wave 1-2 (black) but not the larger wave 4 (green) pattern.
- In this case, the wave 4’ (green) is expected to bounce (blue arrow) at the 38.2% Fibonacci retracement level.
- A deeper pullback places the current wave outlook on hold (yellow button) or invalidates it (red button).
