GBP/JPY In Final Stages Of Advance

The pound proved to be one of yen’s strongest rivals in the last month and a half. The pair rose from below 175.00 to above 190. Despite today’s intraday weakness, the bulls still seem confident enough to continue the uptrend. But how higher should we expect the GBPJPY pair to climb? If we trust the Elliott Wave Principle, not much.

GBP/JPY: 4 Hour

As visible, the rally between 174.86 to 190.70 forms a perfect five-wave impulse. Wave 5 looks like an unfinished ending diagonal, whose fifth wave is still to come. In theory, once wave “v” of 5 is over, GBP/JPY is supposed to head south for a minimum of three waves. That is why we have to be careful, if a new top around 191.00 occurs, because a reversal is likely to follow. Of course, the idea of a diagonal in wave 5 will be confirmed, only if the rate falls through the lower line of the pattern. The one, which connects the bottoms of waves ii and iv. If this does not happen, there will be no confirmation.

And it is always better to wait for confirmation.

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