So, EUR is still coiling around, maybe we take a look at it tomorrow. Meantime, as we've decided, let's take a look at JPY. I start right from major thing, which is evident on very long-term chart - I use 6 months. In fact, to answer the question about long-term direction we need understand only one thing - what will happen at current top and OP target.
We have AB-CD pattern with completed OP and followed retracement after that - here is no questions. But, JPY has not turned down after OP but returned back to upside action. It means that this action is "extension" mode, i.e. continuation of AB and CD legs. And by all rules, normal bullish market (based on direction), it should going to XOP @180. And here is major intrigue stands. Normal bullish market has to keep going higher. But, any signs of weakness around a top, such as Wash& Rinse or anything means that upside continuation fails. In fact, when we deal with DRPO "Sell", it has the same idea on the top - capitulation of the bulls. When bulls initially think that this is just a retracement and start pushing price through the top, but surprisingly they have not enough power and capitulate. Bears take control. Here is the same might happen but in very big scale that set JPY direction for 1 year or maybe longer. This is 6 month chart, guys.
All other things are just technical details. Thus, on weekly, trend has turned bearish, upside action obviously becomes slower, and we have the divergence. Here two patterns are possible. First is - completion of OP around 153-155 area, and butterfly @ 158 area. Butterfly looks nice, but somehow I suppose that OP seems more realistic. Current downside action is not the reversal yet:
On daily chart market has two patterns - bullish "Stretch" and Morning star. Stretch is mostly done already, while Morning star suggests some upside action. Besides, recalling big picture idea, here, I would consider two patterns. First is - Double Top, if JPY returns just to the top or H&S if it goes to 153 at least:
On intraday charts we have absolute mess, which makes it very tricky to trade. Based on Morning star, we should get some AB-CD, probably. Now OP stands around 151, while XOP at the same 153 area (not shown here):
I do not call you to buy JPY now, although it is not forbidden. What I would like to tell is current moment is not reversal yet and JPY due to strong upside momentum could show multiple upside swings, turning to wobble action around the top. Our task is to watch for big bearish patterns on daily chart. If they will be formed - it means that JPY bulls capitulate and next year direction will be down. Upside breakout potentially makes possible 180 level in perspective of the year or two.
So, markets are taking the rest. Today we prepare only FX update on GBP, because it has important moment. First is, recall that GBP stands in monthly B&B "Buy" with 1.2720 target. It means that upside action, at least in theory, is not over yet. At the same time, GBP hits daily XOP that could be some temptation for taking short position.
But recent action that we see around the target makes us to not do it. Especially when we take a look at 1H chart. On daily chart price stands tight around XOP and above K-area, showing no significant downside action. It could mean an "energy building" process for upward continuation:
On 1H chart chart, once upside butterfly has hit 1.27 target we've got reasonable pullback, but it was short-term and reversed fast. Since butterfly target agrees with XOP, normally, if market changes sentiment - it has to start dropping actively, which we do not see here. This makes us suggest that we could get 3-Drive here with 1.2585-1.26 target area. Which, in turn, also hardly become a reversal pattern, because monthly B&B has higher value. But 3-Drive could trigger decent pullback, so if you still would like to go short on intraday charts, maybe it makes sense to wait for this pattern... But to be honest, I do not want too much to sell until B&B will be completed...