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The markets seem to be calming some in preparation for the holidays. As such, it’s a good idea to use an extra dose of patience when looking for setups. You may also want to lower any expectation for follow-through as liquidity begins to dry up going into the last few weeks of the year.
That said, I do like the idea of buying GBPJPY dips as long as the pair stays above the 186.09 key level. This level played an important role as the key handle for the December 1st breakout, which led to a 350 pip rally. While I’m not expecting that kind of strength going into late December, I do think this market could move higher from current levels.
The market respected this level today on a 4 hour basis after breaking the descending channel coming off year highs. From here we need to keep an eye on 187.70 as an area where sellers could show up. A break there could push the pair to retest the year high at 189.45. But again, follow through may be hard to come by as we close out the year, so take what you can get.
Summary: Wait for a retest of the 186.09 area and watch for bullish price action. Key resistance comes in at 187.70 and the year high at 189.45.
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