GBPJPY to Continue Sinking Lower

The GBPJPY is currently developing a new downtrend following the completion of a major Double Top pattern recently. The price action is headed towards the previous swing low at 148.500. This is where a pullback to the 61.8 per cent Fibonacci retracement level at 150.387 is likely to emerge.

This pullback is expected to serve as the second retracement leg (3-4) of a 1-5 impulse wave pattern, as postulated by the Elliott Wave Theory. Bears can take advantage of this by entering short there.

The final impulse leg (4-5) is then likely to head towards the 1.272 Fibonacci extension level at 147.123.