The 4-hour chart shows 134.00 as a potential turning point since it has acted as support and resistance in the past and lines up well with the 61.8% Fibonacci level. On top of that, we have a bullish divergence on Stochastic, too.
I zoomed in to the 1-hour chart to pinpoint potential entry points, and I think the area between the 134.00 and 133.00 looks good since the PWL and lower WATR are in that zone as well.
Fundamentally, I’m inclined to believe that GBP/JPY will head up in the coming days. Why? USD/JPY is drawing closer and closer to pre-G7 intervention levels, so yen bulls may start to ease off the pedal.
Now, I ain’t gonna commit to this trade just yet, especially with the U.K.’s quarterly GDP coming out in just a few hours. Though forecasts say the report will probably print a nice 0.5% rise after Q4 2010’s 0.5% decline, I don’t want to take any chances by exposing myself to wild swings when the report is released.
So for now, my game plan is to watch and wait for confirmation (in the form of candlesticks) in the zone I highlighted. In the meantime, I’d love to hear what you think about my trade idea. Hit me up with some comments below, fellas!