After rallying for 2 weeks consecutively, GBPJPY needed to take a break and halt for a retracement. The 157.70 was an ideal level for the market to tap and then retrace. From that point onwards, the pair started into its downward move. On H4, the trend has shifted towards a bearish side. The support level of 156.70 was pierced, which paved way for the bearish sentiment to creep in the markets. Until market stays below this level, we are bearish on the pair. It might fakeout upwards to gather liquidity, other than that, we are still bearish. It has begun to form the LL and LH structure on the H4. If market rejects this level of 156.50, we will have a more downside on GBPJPY.

GBPJPY is revolving within a descending channel. The descending channel has two sides of trendline: the support and resistance trendline. At our short position target, we will have to observe the trendline breakout buy closely. Most probably, we might wick beyond the trendline and then fall back within it. On the lower side, we have the window till the support trendline for our profit targets for the shorts.

The 75-78.6% retracement level is a little above the resistance level. This level can be tapped as a wick or liquidity grab. At this level, we will take the short position and we will have confluence of the trendline as well. Until the breakout of the trendline and resistance is validated, this retracement stands solid and validated.

EMA 50 and EMA 200 are bullish. In EMA, we have a bullish death cross. Currently, the EMA 50 has been ranging with candles breaking in and out. This means, EMA 50 cannot provide a solid sentiment to predict the movement of the pair.

Both the oscillators are in a bearish region, RSI being at 45 and CCI at -17. This indicates market is still bearish as analyzed through the oscillators. It should be noted that the market is close to its neutral levels, which indicates that there is room towards the bottom.

Shorting GBPJPY

Oct 27 2021

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