After a massive bullish impulse, we anticipate a correction for the pair. We will analyze H4 for intra-day setup.

- Market structure: Market structure on GBPJPY is bullish but on the Daily, it is still bearish unless it breaks the resistance level at 153.50. This area is the make or break point for the daily. Although weekly remains bullish, the only neutrality is struck with the daily chart. At the resistance level of 153.50, there is a probable pullback. This resistance is also a supply zone which has merely been tested before. Hence, the strength of this level remains solid.

- Trendline: What is seen on the charts is the bearish pennant patter. GBPJPY has a resistance trendline and a support trendline. The upper trendline will be in confluence at the resistance level, being tested the 3rd time. Whereas the support trendline, it is still in formation and GBPJPY might test this level or break it.

- Retracement: The golden retracement level of 75-78.6% remains in confluence with the resistance level. With the strength of the level, we have 3 confirmations with this retracement.

- EMA's: Both EMA’s are bullish, above the current prices. EMA 50 has been pierced earlier and has already been tested twice. However, EMA 200 was broken 7 candle before on H4 and is due a retest to continue upwards. We will set this retest as our potential profit targets.

- RSI/CCI: Both oscillators are bullish right now. What we expect is the market to tap into the over-bought regions for both the oscillators, at which point, bearish divergences might be formed on a lower time frame. This will add as a confluence with the resistance as well. Also, it is to be noted, both oscillators are near the over-bought region.

Although GBPJPY is bullish, we are monetizing on the intra-day for the corrective move. This certain setup has 3 confirmation factors which build a decent trade setup. Stop loss should be held tight as we do not want to be caught against the trend.

GBPJPY pullback on the cards

Jul 29 2021

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