GBP/JPY: Opportunity For Continued Gains To 171

The run up to 168 has been both enjoyable and impressive at the same time. However with 168 being a key level (and the 38.2% retrace on longer-term charts) I am seeking evidence of a potential correction before a resumption of the uptrend.

GBP DAILY: LT and MT momentum still clearly bullish

Price is now hovering around the 168 level but this comes as no surprise taking into the significance of it. Not only is it the swing high of August 2009 but this is also the 38.2% retracement between the pre-crisis highs of 2007 and all-time lows of 2012.

Ultimately my analysis sees a continuation of gains on the longer-term charts and any break above the 169 swing high could target the upper channel and Monthly R1 pivot around 171.0.

Momentum is still clearly bullish and tops can take a while to process, so the strategy would still be to remain bullish upon any break to new highs.

However a slight concern though is how we are continuing to see positive news come out from the UK, yet the last couple of sessions have produced bearish closes. Whilst this is not exactly a sell signal within itself it does raise the question of how much of this was already priced into the markets.
GBP/JPY Daily" border="0" height="769" width="1329">
GBPJPY: Alternative scenario - Intraday Momentum losing pace

Before any correction/reversal can occur, momentum will begin to diverge on the lower timeframes before this impact the higher timeframes. Here we can see the hourly chart where the MACD (of 20 and 50 eMA's) is on the cusp of turning below zero line to confirm negative momentum, and has producing a bearish divergence since the end of November.

Price has tested and failed to break the Weekly R1 and now dipped beneath the 168 level. Whilst momentum on H4 and D1 are still very bullish, H4 momentum may be approaching a cycle top which could result in choppy price action across H1 and H4 over the next few days / weeks.

This will then have the knock-on effect of reducing the momentum on D1, before seeing the deeper correction on the higher timeframes.
GBP/JPY H1" border="0" height="769" width="1329">
SUMMARY:
- Primary trend remains bullish
- Break above 169 opens up 171
- Potential for retracement within bullish channel
- Key levels of support: 165, 162, 160

DISCLAIMER: Trading in the Foreign Exchange market involves a significant and substantial risk of loss and may not be suitable for everyone. You should carefully consider whether trading is suitable for you in light of your age, income, personal circumstances, trading knowledge, and financial resources. Only true discretionary income should be used for trading in the Foreign Exchange market. Any opinion, market analysis or other information of any kind contained in this email is subject to change at any time. Nothing in this email should be construed as a solicitation to trade in the Foreign Exchange market. If you are considering trading in the Foreign Exchange market before you trade make sure you understand how the spot market operates, how Think Forex is compensated, understand the Think Forex trading contract, rules and be thoroughly familiar with the operation of and the limitations of the platform on which you are going to trade. A Financial Services Guide ( FSG) and Product Disclosure Statements (PDS) for these products is available from TF GLOBAL MARKETS (AUST) PTY LTD by emailing compliance@thinkforex.com.au .The FSG and PDS should be considered before deciding to enter into any Derivative transactions with TF GLOBAL MARKETS (AUST) PTY LTD.

Please ensure that you fully understand the risks involved, and seek independent advice if necessary. Also, see the section titled “Significant Risks” in our Product Disclosure Statement, which also includes risks associated with the use of third parties and software plugins. The information on the site is not directed at residents in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. 2013 TF GLOBAL MARKETS (AUST) PTY LTD. All rights reserved. AFSL 424700. ABN 69 158 361 561. Please note: We do not service US entities or residents.