The week has been another very volatile week. The market finished with looked to me to be the end of a bear rally. The week ahead is going to be another volatile one, with the election on Tuesday.
GBPJPY moved up at the first half of last week to test the 61.8% of the move from 139.50 to 180. This has now formed a pivot for a channel top . There are 2 scenarios that will play out next week. I am favouring scenario 1 at the moment, although there may be some sort of up thrust to test the 161 area before we get the drop .
1) The 61.8% fib retracement did form a channel top at 165 and in the beginning part of next week ,we may see a re-test of this channel at about 161 . This will look like a breakout of the current bull flag on the 60 min chart and re-test may well be in the form of a bull trap before the big drop into bottom of channel at 125. If the slope of the down move from 160 region is the same as the slope of the move from 180 to 139 we could see the 125 target by late this week or early the week of Nov 10th to 14th.
2) Scenario 2 is that this really is a bull flag and we get a breakout of the top of the flag. The 1-2-3 buy formation gives a long trade on a breakout of 161.80 with upside targets of 165, 170.8 and 174
The GBP had a bear rally last week, stopping right on the 38% fib retracement of the 1.8670 to 1.5270 up move. It has formed what looks to be an evening star candle formation on the daily. We need to get a break down of 1.6000 for this to be confirmed. There are 2 scenarios that may play out next week. I am favouring scenario 1.
1) The evening star is in fact a bearish reversal signal and price breaks below 1.6000. There is a 1-2-3 sell formation that can be drawn on the daily chart. If the 38 % fib extension of this 1-2-3 sell is broken at 1.5858 then downside targets are 1.5335, 1,4965 , 1.4489.
2) If the rally is going to continue into next week ( which we doubt) there is a 1-2-3 buy formation on the 4 hour chart , with fib expansions placed on gives us a buy entry at 1.6540 with upside targets 1.6870 , 1.7500 , 1.8000
If the GBPJPY sell scenario comes into play there is also a short trade set up on the eurjpy , which is a short under 124 , for downside target at bottom of channel 110ish.
Using fib time cycles and symmetry on US stock indexes and currency pairs a new pivot low could form on or around Nov 7th .
Once again we wish you luck in your trading next week. The team at Trade4freedom expects it to be another volatile week
www.trade4freedom.com
