Sell GBPJPY Can It Drop Big OR ??

2022年1月2日

Possible selling opportunity on GBPJPY that can last anywhere to 3 to 5 days though if the current level is respected has the possibility to turn into a monster of a trade that can bank 500 pips or more pretty fast.

The way I approach trading is a top down approach where I look for key levels on the Monthly and Weekly charts and zoom into the lower timeframes daily and 4hr charts to look for slowing of momentum inside higher timeframe areas this is what I explain below.

On the GBPJPY Monthly charts we are now at a key area which is the 2016 Brexit area where price absolutely tanked. Price has respected this area several times on the Monthly chart see the chart here -

Next if we look at the weekly charts you can see we had that huge up leg that started in 2020 and formed the top in March 2021 since then we can clearly see on the daily charts price has been in a Distribution| sideways | rangebound market between 149 and 157 we are now at that level again. Price actually hitting 156 on Friday see chart here -

Now on the Daily Charts At the 156 level, which is also the top of the range we have a nice UNTESTED SELL/SUPPLY area where price broke down heavy at the beginning of November dropping to the bottom of the range pretty fast. We have now made it all the way back to the top of the range see the chart here -

I now move down to the 4hr chart and what I see here as we approach the top of the range and inside the weekly and daily levels is clear evidence that momentum is slowing down. Price has been slowly grinding higher and creating MACD divergence signals. Indicating buyers are losing steam and sellers have started to come into the market you can see this a lot more on the 1 hour charts as price is moving sideways see the 4hr chart here -

The above price action is indicating to me that there is a good possibility that the GBPJPY will sell off this week from this current level my position details are as follows.

SELL GBPJPY @ 156 STOP LOSS 157.3 TAKE PROFIT 151

*Note I open my trades on a Monday morning since I am Asia and close all positions on a Friday regardless of where it is*

Its a good trading idea though as with any idea it can also go the other way so good money management is always the key to successful trading.

Hope you enjoyed the analysis