Pounding the Yen or Yenning for Pound?

The British pound / Japanese yen (GBP/JPY) pair is approaching the 240 level anew.

The currency pair has recovered about 62% of its July-August drop from 251.10 to 219.30; but, individual patterns in both legs of the cross and the cross itself warn that now is not the time to turn bullish for a test of the high.

It would be best to wait on break-outs to occur. A break out of the 240 figure would continue the generally bullish sentiment. However, a breach of the trend line support would trigger a test of the 200 level, and this is from an Elliot Wave perspective.

The rally from 192.62 occurred following the breakout of a triangle. Triangles lead to terminal thrusts. In other words, price comes back to the center of the triangle following completion of the breakout rally. The rally is in 5 waves, indicating a high probability that a top is in place at 251.10. In this case, the center of the triangle is near 200.

On the other hand, a Simple Relative Strength Index (RSI) study also suggests that the GBP/JPY may be in for a much bigger decline. There is already an overbought signal as the RSI is well above 80.