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GBP/JPY - From a False Bullish Breakout to a Bearish Continuation

The 4H GBP/JPY chart shows a classic example of a false bullish breakout turning into a sharp bearish swing, continuing a trend that has been developing in May.


(gbpjpy 4h chart, 5/28)

Note that the break above 171.80 broke above
1) a small consolidation range
2) a falling trendline
3) the moving averages (200,100,50) in the 4H chart

It is because such a a strong bullish signal failed, that we should look for a possible bearish.


(gbpjpy daily chart, 5/28)

The bearish outlook is in the 4H chart, but the daily chart shows a sideways market.

First the current dip has the 165.50-170 support pivot area to deal with.

Below that, the 167.76-168 area is the next key support. We should probably limit our bearish outlook to 168 for now. A break below 167.75 then can open up the 2014-low near 164.00.

Subsequent failure to push above 170.00 can add weight to the bearish scenario toward the 2014-low. Only a break below 163.80 should open up a bearish outlook for the second half of the year. For now, we should note that the prevailing trend has been bullish before consolidating and the end of 2013 through 2014 so far.