- The GBPJPY pair has rebounded strongly since the start of the year and the impact over 178.75. The market registered higher highs and lows, pushing prices 7% up in less than 2 months. The medium-term trend was therefore bullish.
- However, the market twice failed to break out its last high at 191.20.
This failure led prices to break their uptrend line, as well as register a new low towards the crucial 188.35 area (23.6% Fibonacci).
This double top pattern is very alarming for the market, especially since it is also confirmed by the recent bearish breakout of the RSI, which is now moving inside its selling zone for the first time since the start of the bullish trend.
- This is a bearish reversal situation. The double top pattern suggests that the market will not simply enter a sideways consolidation, but will register a much deeper correction.
Prices appear to be attempting a pull-back on the neckline of the pattern, but the next supports will be at 186.51, 185.05, 183.55 or even lower.
Pierre Veyret, Technical Analyst at ActivTrades
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