GBP/JPY has been rising in an uptrend since January 3 flash crash created a deep spike on the daily chart of this currency pair. Lately, the rally stalled in a formation with two peaks, which closely resembles a double top pattern. The formation becomes valid only following a breakout below the pattern’s neckline.
The chart below shows the neckline and the two tops marked with the yellow lines. The cyan line marks my buffer zone of 10% of the pattern’s height to enter a short position on breakout. I will place the take-profit at where the green line is. It is placed at 100% of the pattern’s height below the neckline. I will set my stop-loss to the high of the breakout candle or to the high of the preceding one if the breakout candle is trading mostly below the neckline. I won’t trade bullish breakouts from this trend reversal pattern. You can click on the image below to see a full-size screenshot:
I have built this chart using the ChannelPattern script. You can download my MetaTrader 4 chart template for this GBP/JPY pattern. You can trade it using my free Chart Pattern Helper EA.
If you have any questions or comments regarding this double top on the GBP/JPY chart, please feel free to submit them via the form below.
