#GBPJPY has recently formed a key supply zone.
If the price is to reach this area we should expect to see the market trend towards it on a lower timeframe.
Could this offer us trading opportunities?
Watch the video to learn more…
Today, we’ll be going through GBP/JPY as there could be an opportunity to buy the market.
The reason why I’m looking for it to move higher is actually a counter-trend of what I’ve been looking at. Mostly, due to the fact that the GB Pound has been moving lower and the JP Yen moving higher.
In theory, we should look for short opportunities on GBP/JPY. However, I do feel that there is an opportunity to counter-trend back up to some key resistance levels.
Because if I look at this daily timeframe, I want to identify areas where I want to be short from.
Now, if we look at where we started to see aggressive selling pressure, it was all the way around 150 to 88. This is where institutions pushed the price. They took profits, then switched from buying to selling aggressively.
That caused the formation of a supply zone where market orders were placed. Typically, they want to add more positions from the same point when that happens. I’m expecting the price to climb up to 152 or 153, then continue another leg down.
So, that’s where I would want to be a buyer from if I were an institution. If I wanted to be a seller, then I’d want to drive the price back up to that level.
The daily timeframe on GBP/JPY highlights a significant supply zone at 153.00. We know that this is a supply zone because we saw strong selling pressure from this area. If an institution wants to add short positions, we will see the price rally back before further selling continues.
When they start to see their market moving, they start taking profits. This pushes the price back; and we should see sellers re-enter the market soon.
Going to the four-hour timeframe, the price is now forming higher highs and higher lows, then we had a consolidation. The price broke out and pulled back down to the consolidation area. Now, we have a nice high volume level at 150.12.
Now, what’s interesting about this is if I actually go to an hourly timeframe, it actually sits in a nice little demand zone.
If I go look left, and we see here, the last bearish candlestick before the aggressive buying came into the market was all the way back down in this 150 12 zone, and we can see that the reaction at the moment is a bullish reaction away from this area.
Now, what I would want to see to complete this pattern is a change in cycle.
If the hourly was to change trend here and we started to see a structure break of higher highs and higher lows.
Looking at the lower timeframe, the price found support at the high volume level from the higher timeframe at 150.13. We need to see the hourly timeframe structure change to look for the counter-trend opportunity. If this timeframe were to form higher highs, then we could anticipate a counter-trend move.
I would like to look for buying opportunities on GBP/JPY. The first target is at the previous structure high where selling came into the market. The second target would be up at this 153 level.
Keep an eye on GBP/JPY. We also have the opportunity to break a trend there. So, if the market were to break through this trend line and break to the upside, then we could look for further long opportunities.
Remember, this is a counter-trend move, so it’s not going with the typical strength and weakness. This is based on the supply and demand in the daily timeframe.
Apply what you learned when you trade GBP/JPY today. The good news is that you can test your trading strategy risk-free. Sign up for a free Blueberry Markets demo account here.