Hi Traders! GBPJPY short term forecast update and follow up is here. On December 4th 2024 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!
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My Idea
On the H4 chart, based on the Heikin Ashi candles we can see that currently, we have strong bearish bodies in downward moving market conditions so it basically reflects a bearish environment. In addition to this, the price which is moving lower has created a bearish trend pattern in the form of three lower highs, lower lows which we may consider as evidence of bearish pressure. Generally, after a bearish trend pattern, we may expect corrections and then further continuation lower. Currently it looks like a correction is happening. Also, while measuring the bearish trend pattern using the Fibonacci retracement tool, we have two key resistance zones that have formed. The first key resistance zone is formed by the 23.6%(190.842) and 38.2%(192.554) Fibonacci retracement zones. The second key resistance zone is formed by the 50%(193.938) and 61.8%(195.321) Fibonacci retracement zones. Until these two key resistance zones (marked in red) shown in the image below hold, my short-term view remains bearish here and I expect the price to move lower further.
GBPJPY H4(4 Hours) Chart Current Scenario
In this pair based on the above-mentioned analysis my short-term view was bearish and until the two key resistance zones hold I was expecting the price to move lower further after pullbacks. The price action didn’t follow my analysis here and this idea failed. After the bearish trend pattern the price which was moving higher reached the second key resistance zone. The price then moved higher further and we got a valid breakout above this key resistance zone thus invalidating this short-term bearish view.
So, traders, this is why I wanted to show this example to help you understand why we should always trade based on the facts and hints provided by the market and take the right actions according to that. Even though we had various facts supporting the bearish view here, the price didn’t hold in the two key resistance zones as I expected it to and broke above them, which is a contradictory sign provided by the market opposing the bearish view. Also, you should keep in mind that losses are part of trading we can’t expect every trade to go as per our plan and provide us profits. In trading, we can’t avoid losses but in order to be successful in trading, we should know how to cut losses early and how to manage the trade when the price goes in the opposite direction.
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Arvinth Akash
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