vForex Technical Update
The 4H GBP/JPY chart shows a market that made two lows one at 116.83 in September and another at 116.97 in October. The market then rallied above the 120.60 pivot, forming a double bottom.Note that the RSI reading in this time-frame rose above 70, reflecting bullish momentum in the medium term. This week, price action came down from the 122.50 area to retest the previous resistance area, and after a temporary break, the market is showing support throughout the Thursday US session. Successful support here confirms a double bottom, which reflects risk-on trading.
Bullish Projection: A conventional double bottom breakout (or range, channel breakout) target is the width of the pattern projected in the direction of the breakout. In this case, the target would be near 124.30. Observing the daily chart, a more conservative target could be the 123.20 pivot, and the 123.83, 50% retracement level. It should be noted that while yes, we have a double bottom, and a break above a declining trendline seen in the daily chart, the long-term trend is still bearish as the market trades under the 200-period simple moving average and the RSI reading is still below 60. Maximum bullish target therefore should probably be 61.8% retracement at 125.48 for now.
Fan Yang CMT
Chief Technical Strategist