Last shocking events on pairs with a pound highly distorted picture of the technical charts. However, let’s try to look at the pair GBPJPY and see what we can tell. On the daily chart we have a great inside bar pattern, breaking out of it will probably take some time. I marked it with blue rectangle. Inside it we have a similar but slightly smaller formation, so we can try to play it. We have a downward trend, and the price is at a clear resistance. We can expect further declines and bearish breakout. It seems that any gains should give interesting opportunities, especially those above the red IB or any false breakout testing at the same time the resistance level.
Let’s take a look at the monthly chart using the same methodology of Inside Bar. Here you can see that breakout of the IB bottom in line with the dynamic downward trend. This is a sign that a flat correction is over and the price returned to the main trend. It seems that this decline can reach levels from 2009, 2011 and early 2012 – highlighted on chart support.