Trade of the Day: GBP/JPY

By: Dima Chernovolov

GBP/JPY continues to fall inside the 4-hour Down Channel chart pattern which was identified recently by Autochartist. Autochartist rates the quality of this Down Channel at the 6-bar level – which is the result of the significant Initial Trend (7 bars), lower Uniformity (4 bars) and strong Clarity (8 bars). GBP/JPY is expected to fall further inside this Down Channel – in line with the earlier breakout of the key support level shown below.

As can be seen from the daily GBP/JPY, the price earlier broke the key support level 130.90 (which stopped the sharp downtrend in January). This price level is acting as strong resistance level after it was broken. The proximity of this resistance level and the strength of the active daily downtrend increase the probability GBP/JPY will continue to inside this Down Channel.