Hi Traders! GBPJPY short term forecast and technical analysis is here. The way I would like to analyze the chart for setups is based on multi-timeframe confirmations because in my POV if we get more evidences on different timeframes for the same direction then it makes the setup much more reliable. If you would like to learn more about the way we trade and the technical analysis we use then check out the Traders Academy Club Spoiler alert – free memberships are available! Let’s start our analysis from the highest timeframe which will be the daily chart here.
You can find the video explanation of this idea here
GBPJPY D1(Daily) Chart Analysis – Parabolic Sar, ADX Indicator
On the daily chart after the strong bullish rally currently it looks like a correction is happening in the form of potential double wave down. The price has created the first leg to the downside followed by a correction and I expect the price to create a second leg to the downside. The ADX indicator gave a bearish signal at the cross of -DI (red line) versus +DI (green line) here, and the main signal line (silver line) reads value over 25, we may consider this as an evidence of bearish pressure. In addition to this, based on the Parabolic Sar we could see that the dots are above the price which we may consider as yet another evidence of bearish pressure. Also, currently there are no signs opposing this short term bearish view. We may now move down to one timeframe lower and see if we can find evidences supporting this bearish view.
GBPJPY H4(4 Hours) Chart Analysis – Lower Lows, ADX Indicator, Strong Resistance Zone
On the H4 chart the price which was moving higher reached a strong resistance zone (marked in red), respected it and bounced lower from this zone. The price then moved lower further and broke below the last low at 151.163 thus forming lower lows based on the MACD indicator, which we may consider as evidence of bearish pressure. In addition to this, the ADX indicator gave a bearish signal here as well at the cross of -DI (red line) versus +DI (green line), and the main signal line (silver line) reads value over 25, we may consider this as another evidence of bearish pressure. Also, we had a strong support zone and the price which was moving lower has broken below this zone and is holding below it. We may consider this as yet another evidence of bearish pressure. Currently this strong support zone is acting as a strong resistance zone for us. Until this resistance zone (marked in green) holds my short term view remains bearish here and I expect the price to move lower further.
Technical Analysis & Forecast Summary
GBPJPY D1(Daily) Chart Analysis
- Parabolic Sar, ADX Indicator
GBPJPY H4(4 Hours) Chart Analysis
- Lower Lows, ADX Indicator, Strong Resistance Zone
Trading Tips
It is always recommended to look for confirmations before you jump into any trade. If you are not sure about how to trade this short term sell setup then you can use any setup and strategy that you have in your arsenal to look for bearish moves and join this sell trade.
Also don’t forget to protect your sell trade using a stop loss and make sure to set a target and keep a proper risk/reward ratio.
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Happy Trading!
Yordan Kuzmanov
Chief Trader at the Traders Academy Club
