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Today’s Trading Edge: GBP/JPY Drops Sharply and May Form a Bullish Gartley Pattern

Posted by Edward Moya on Jul 17, 2014 10:13:00 AM

WWM GBPJPY JULY 17 2014

Earlier this month, GBP/JPY formed a three-drives-to-a-top pattern after price made a high at 175.35.  The selloff eventually found support around the 173.00 and triggered a rally towards 174.50 which was met by sellers.  The sharp drop is currently suggesting that the pair might see bearishness target a move towards the 50-day SMA at 172.53.  It is around that area that we may see price tentatively form a bullish Gartley pattern. 

Price action on the daily-chart displays that point D of the bearish Gartley pattern may form around the 127.2% Fibonacci expansion level of the B to C move.  Further support may come from the 171.79 level which is also where the 100-day SMA is trading. 

Major upside resistance on any rebound will be the 175.50 region.  Eventually longer-term upside may target the 183.95 level, which is the 50.0% Fibonacci retracement of the historic 251.09 high to 116.82 low move.      

The trade: Buy GBP/JPY at 172.55 with a stop loss at 171.75 and a take profit at 174.25.  The Risk/Reward Ratio is around 1:2

Edward J. Moya

Technical Strategist

WorldWideMarkets Online Trading

 

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