The GBP/JPY is almost unchanged as the Asian session kicks in, though Wednesday’s session witnessed the cross falling to new weekly lows of 159.50. However, the GBP/JPY pair staged a comeback and formed a dragonfly doji, which suggests bulls are moving in. The GBP/JPY is trading at 160.50 at the time of writing.

Although a two-week-old support line puts a floor under the GBP/JPY prices near 160.00, the recovery remains elusive unless the quote provides a daily closing beyond the 200-Exponential Moving Average (EMA), around 162.20 by the press time.

From a daily timeframe perspective, the GBP/JPY is still neutral-to-downward biased, with the exchange rate remaining below the trend-setter 200-day Exponential Moving Average (EMA) at 162.14, which is also above the 50-day EMA at 161.74. For the GBP/JPY to continue its downtrend, it would need to crack the 20-day EMA at 160.05, and then, the pair may pose a threat to break below the weekly low of 159.50.

The GBPJPY currency pair is presumably in the final part of a major correction pattern - a triple zigzag Ⓦ-Ⓧ-Ⓨ-Ⓧ-Ⓩ. That is, an actionary wave Ⓩ is formed. It seems to take the form of an intermediate double zigzag (W)-(X)-(Y). In an alternative scenario, it is assumed that a large bearish intervening wave x is currently forming. It may end in the form of a triple zigzag, for the construction of which a final sub-wave Ⓩ is needed.

The current structure of the primary wave Ⓩ suggests an intermediate triple zigzag (W)-(X)-(Y)-(X)-(Z). The first four zigzag sub-waves have already been completed. We are waiting for a drop in the sub-wave (Z) to 148.30.

At the specified level, wave Ⓩ will be at 123.6% of actionary wave Ⓨ. 

As an alternate scenario, for the GBP/JPY bullish continuation, the pair needs to reclaim the psychological 161.00 figure. Break above will expose the 50-day EMA, followed by the 162.00 mark. Once broken, the bulls could challenge the 200-day EMA at 162.14.

Selling EURJPY Below DEMA100 and 200

Jan 26 2023

Stop Loss -0.94%

Holding time 26d0hr

160.966

Entry price

162.484

Stop loss price