Cross-Eyeing: Double Bottom on GBP/JPY?

Check out your GBP/JPY 4-hour chart and tell me what you see. No, playa, you ain’t seein’ double! That really IS a double bottom on your screen, or a J-LO as I like to call ’em!

GBP/JPY 4-hour chart

Knowing that I’m a big fan of crosses, my brother from another mother Big Pippin notified me of this setup on GBP/JPY.

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.

GBP/JPY 4-hour chart

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!

  • xbizmaster

    hi, may i know what charting software is that? where can i get it? thanks so much

  • 12bleach

    For your entry point to be hit around 133.34 area GBP/JPY would have to break a long term trend line started around 3/25; which I don’t see the pair doing unless it plans in going lower; which I also don’t see it doing since technicals are bullish on the pair confirming bullish fundamental news that has been coming out. You might have a chance to enter in the low 135 area.

    • cyclopip

      It blew up mid-way last week, going all the way back up to 137.00. I actually got in on a retracement back to the 136.00 handle. I also got stopped out late on Friday, but things are looking a little better now. I actually made a new blog post about this, you can check it out here :

  • Bleach

    I meant mid 134 area like 134.68**