GBP/JPY Outlook (21 October 2024): Key Price Levels. Harmonic Pattern Structure
The chart seems to display a Gartley harmonic pattern. This can be seen through the labeled points X, A, B, C, D, which denote a classic five-point pattern used to predict potential reversals.
The retracement levels (like 0.618 and 0.786) shown between these points suggest that price action is expected to respect key Fibonacci ratios. For example, point D typically marks the reversal zone in harmonic patterns, where a trend reversal is expected after a harmonic completion.
Breakdown of the Pattern:
X to A: This appears to be the initial impulse move down.
A to B: The corrective upward move which retraces about 0.586 of XA.
B to C: A downward move that retraces part of AB (point C aligns with a strong price level).
C to D: An expected upward move towards D, likely completing the harmonic formation.
The completion of point D often indicates a potential reversal or new trend, and the trader would expect bearish movement from D.
2. Market Structure and Break of Structure (BOS)
There is an internal BOS (Break of Structure) marked on the chart, signifying a potential shift in market dynamics. This is a key signal in market structure analysis, suggesting that the price has broken a previous high or low (in this case, a high), indicating a trend change.
This BOS internal (H) indicates that the market might have switched to a bullish phase.
3. Volume Profile and Point of Control (POC)
Volume profile analysis appears on the chart, showing where the majority of trading volume has occurred. The POC (Point of Control) at the 194.191 level indicates that this price level has attracted the highest traded volume in the past sessions.
The volume profile helps traders understand where price is likely to consolidate or reverse based on historical trading activity.
4. Projected Elliott Wave Count
The chart also uses Elliott Wave Theory principles, particularly to project the ongoing and upcoming price waves.
The wave count suggests that the current price action might be in the midst of Wave 2 of a larger bullish impulse. After the completion of Wave 2, Wave 3 (which is often the strongest and most impulsive wave) is expected to begin.
The invalidity level for the Elliott Wave structure is marked at 192.462. This means if price drops below this level, the current wave count becomes invalid, and a reassessment is needed.
5. Fibonacci Retracement Levels
Fibonacci retracements are marked to assess potential retracement levels, notably 0.618 and 0.786. These levels are typically considered areas where price could retrace before continuing in the direction of the main trend.
Currently, Wave A is seen retracing to 0.618 at 194.587, and further potential retracement could be to 0.786 at 194.191 before an upward move.
6. Weekly Expectation and Timing (Monday to Friday Overview)
The red vertical lines indicate the transition between trading days from Monday to Friday, with key expectations for the week ahead:
A bullish start is projected early in the week (Monday-Tuesday), with potential completion of Wave D around midweek.
A corrective structure or internal pullback is expected around Wednesday.
A new bullish leg is anticipated towards the end of the week (Thursday-Friday) to close the week on a higher note, according to the chart's projected path.
The visualized market structure suggests a corrective move down on Tuesday (T) towards the 0.786 Fibonacci retracement level, after which a bullish movement is anticipated to begin as the next leg up (potentially a continuation of Wave 3). The weekly close (denoted as W CLOSE) is expected to be higher than current levels.
7. Key Support and Resistance Levels
195.270 is highlighted as a potential short-term resistance level, while 194.191 acts as a significant support level. This confluence of technical indicators shows potential areas where price might find resistance (on the upside) and support (on the downside).
The higher resistance zone is shown near 196.043, where a current weak high might result in further resistance as price tries to break above.
8. Summary of Market Outlook
Short-term (Early Week): Bearish retracement from the current price level towards 0.786 Fibonacci level, signaling the end of a corrective phase (C wave).
Mid-to-Late Week: Bullish continuation expected following the pullback, forming a new upward leg likely to complete Wave 3 in the Elliott Wave structure.
End-of-Week Close: Potential bullish close above 195.270, possibly challenging the 196.043 level before a pullback.
