After the exhaustion of the bullish pressure, there needed to be a halt on the GBPJPY at a major resistance level. The resistance level was formed on the daily level of 157.70, from the previous history. We anticipate that market takes a hit from this resistance to move down towards the support level.

The resistance trendline has been tapped by the market and the support trendline is still below the current market prices. We need to see how this trendline reacts. If breakout sells are triggered form this trendline, we may continue for a deep retracement. Otherwise, we may see a reaction at this trendline. 

The resistance trendline has formed the price action divergence. 

There is no retracement factor in this analysis. 

EMA's have a bullish death cross. At the support level, we may see EMA 50 retest. This retest will confluence with the support level and will be acting as our potential profit target.

On the RSI, GBPJPY has a bearish divergence. Whereas CCI, it is still at 127, comparitively below the over bought region of 150. The RSI divergence at the strong resistance level has a parabolic effect which GBPJPY absorbed earlier. We will wait for another retest at the resistance to take a short position.

This trade setup is based on low factors but high probability. This is purely from experience perspective of us as traders. The trend is bullish. We need to keep an eye on the prices breaking the resistance level. As soon as we move towards the 30 pips profit, we will break even our position.

A subtle short on GBPJPY

Vasl Capital

Oct 19 2021

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