GBPJPY started moving up previous week after a massive ripple down effect due to fundamentals. Now we anticipate the continuation of the uptrend to be halted due to a strong resistance level.

- Market structure: GBPJPY had been in an uptrend on H4. It continued forming HH’s and HL’s. 151.20 support level is the key area, which decides the direction of the pair. This support level has already been tested 3 times, which means, the next forced impact might break the structure. This being said, Daily time frame is still bearish until we break the resistance at 153.50. This resistance overlaps on both the timeframs of H4 and Daily. Unless this level is breached, we can’t be sure of GBPJPY continuing up.

- Trendline: There are three trendlines in play. The first one is the descending trendline, which is testing the prices at the resistance level at 153.10. This trendline isn’t breached yet. The second one is the ascending trendline, which is being formed. Market hasn’t reached this trendline yet. If it’s broken, we may see a downward move. Third trendline, is the bearish pennant trendline which is yet to be tested at the higher resistance of 153.50, at which point, a divergence will be formed in the oscillators.

- Retracement: The broken resistance level of 153.50 is in confluence with the retracement level of 75-78.6%. This reflects the two-factor confirmation for going long at this support.

- EMA's: Both EMA’s reflect a bullish bias. EMA 200 was broken earlier but hasn’t been tested yet.  Market tried transitioning into a bullish bias by a death cross on both the EMA’s, but both of them diverged away at the level, keeping the shorts plays in pool

- RSI/CCI: RSI is at 58 and will create a divergence once the market goes to the resistance of 153.50. Whereas CCI is concerned, it is still in the bullish region at 54. Once it starts turning negative, that’s when we will have a further confirmation.

GBPJPY down

Aug 08 2021

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