Hi Traders! GBPJPY short term forecast update and follow up is here. On August 22nd I shared this “GBPJPY Technical Analysis And Short Term Forecast” post in our blog. In this post, let’s do a recap of this setup and see how it has developed now. If you would like to learn more about the way we trade and the technical analysis we use then check out the Home Trader Club. Spoiler alert – free memberships are available!
My Idea
On the H4 chart, the price reached a key resistance zone that has formed based on the 100%(187.310) Fibonacci expansion level of the first wave. Also, we have a bearish divergence that has formed between the first high formed at 186.461 and the second high formed at 186.757 based on the MACD indicator which we may consider as evidence of bearish pressure. In addition to this, we have this bearish divergence on the RSI indicator as well, which we may consider as yet another evidence of bearish pressure. Also, based on the Volumes indicator we could see that the volumes are dropping, we may consider this as yet another evidence of bearish pressure. So everything looks good here as well for the bears as and until the key resistance zone (marked in red) shown in the image below holds my short term view remains bearish here. A valid breakout below the last low at 184.545 would be the validation for this short term bearish view.
GBPJPY H4(4 Hours) Chart Current Scenario
Based on the above-mentioned analysis my short-term view was bearish here and I mentioned that until the key resistance zone holds I expect the price to move lower further. Also, I mentioned that “a valid breakout below the last low at 184.545 would be the validation for this bearish view”. The price action followed my analysis exactly as I expected it to here. The validation for the bearish view which is a valid breakout below the last low at 184.545 happened as per the plan. We then had a pullback and then the price moved lower further as I expected it to and has delivered 330+ pips move!
On the H1 chart, the market provided us with various facts supporting this bearish view. The price which was moving higher created a false break of the previous high at 185.254. The price then moved lower and broke below the most recent uptrend line, we may consider these as facts provided by the market supporting this short term bearish view. Also, there were no signs opposing this short term bearish view. The price then moved lower further as I expected it to and delivered an excellent move to the downside as you can see in the image below!
As traders we always have two choices, the first one is to fall in love with our analysis and try to convince the market and expect the price to move in the direction as per our wish. The second one is to follow the facts that the market provides us and make the right actions according to that. As you know the first option won’t help us and as you can see in the example above what happened when we followed the facts that the market hinted to us and took the right action according to that.
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Happy Trading!
Arvinth Akash
Home Trader Club Team.
