Just the mention of the pair excites the currency trader’s mind; the GBPJPY. The pair, known for its massive directional moves, has rallied over 1,500 pips since its March low at 192.60. The short term pattern suggests that the 5/30 high at 209.31 will give way to a drop to [I]at least [/I]199.79.[I] [/I]
The advance from 192.60 is wave 4 within what will probably be a 5 wave drop from 251.10. The bearish objective is 1 pip below 192.60 (unless wave 5 ends as a truncation). Even if a larger correction is underway (such as a triangle or a flat), then the GBPJPY is still expected to come under 199.79. In other words, even alternate counts (red arrows) favor a short term bearish bias.
Since the top at 209.31, the GBPJPY declined sharply in 5 waves. The rebound is corrective (to this point). Wave c of 2 looks complete as it has unfolded in 5 waves. Also, a trendline that had contained wave c’s price action was broken this morning and has been re-tested as resistance (and held so far). A bearish bias is warranted against 209.31.