The GBPJPY has broken through the weekly lows, suggesting we could see some further downside. Will this breakout offer short opportunities in the future?
I’ll be going through GBP/JPY and what could happen to the pair in the coming days.
As of now, the price has broken through last week’s low, which suggests that we could see some downside momentum. The price could head to the swing lows at 151.9 where it opened and formed a new low.
In the daily timeframe, the price formed a strong bearish close yesterday, adding fuel to the fire for our bias of potential moves to the 151.90 zone. So, I’m looking for the momentum to continue here.
We can break down the market for a day trading opportunity. The first level of interest for me is yesterday’s midpoint area at the high to low of the candlestick, which comes up around about 153.20. The price found support and resistance and rejections in that area before.
The GBP/JPY broke through the weekly lows, suggesting the price will likely go lower. The bearish engulfing close offers short opportunities at key levels. The first level to watch is 153.20, which is the midpoint of yesterday’s trading range. If the price reaches this level and forms a bearish reversal pattern, we can look for short opportunities. The support rests at 151.90 which will likely be a target for any short position.
153.20 is looking pretty good for potential short opportunities if you’re a swing trader. So, if the price comes back to that level then reject it, you could look for some downside.
Alternatively, we can look for Asia session breakouts and things like that.
In the 5-minute timeframe, I’m going to use the Fibonacci tool to look at the low and high of the range and see how the price is reacting to it.
The price actually broke out to the downside of the Asia session range, so it is forming a lower low and a downtrend. If the price rejects that area and forms a bearish close, we could look for a continuation short on the GB Pound – targeting the Asia session lows first, then looking for the price to extend further down to the 151.88 level.
Alternatively, we could look for the price to take out the Asia session lows. This is more of a conservative entry because you have the confirmation of a new low being formed.
Alternatively, we can watch for the Asia session midpoint to break and retest or a break of the Asia session lows for short opportunities.
The rejection of the 50’s is looking pretty good, so you could see how that goes or look for the break and retest the Asia session.
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