As the week close, I really think this currency pair can offer a very good risk reward especially if you look this in the weekly timeframe. Technical indicators are pointed to an overstretched price when last week closed with the formation of that inverted hammer which by the way closed above the upper BB. That overextended price action was corrected and confirmed this week with this very strong bearish engulfing candlestick and concluding the classic three bar reversal candlestick with the inverted hammer acting as an evening star all this forming with an overbought stochastics. Of note is the 84.50 price level which has acted as strong resistance since late 2015 and this level also act as support for 2014 highs of 94. If you place a Fibonacci tool from those 2014 highs to 2016 lows then the 84 level is the 38.2% level and this is where this reversal pattern has formed.
For now, I won’t look to short this pair now but instead wait till next week to initiate a short in the 1Hr chart and look to take my profit hopefully at the 77 which is another area of resistance.
For now, let’s keep this open. I’m already short the GBPJPY and I will enter this trade next week and notify you as always.
Have a good weekend and Merry Christmas.