Hi Traders! GBPJPY short term forecast update and follow up is here. On September 7th 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 Traders Academy Club. Spoiler alert – free memberships are available!
My Idea
On the H4 chart, we had a strong resistance zone and the price which is moving higher has currently broken above this zone and is holding above it, we may consider this as evidence of bullish pressure. After the breakout, this strong resistance zone is acting as a strong support zone for us. Also, the price which is moving higher has broken the last high at 162.488 and has created higher highs based on the MACD indicator which is a sign of gaining momentum towards the bullish side. Also, based on the Heikin Ashi candles we can see that currently, we have strong bullish bodies in upward moving market conditions so it basically reflects a bullish environment. In addition to this, the ADX indicator gave a bullish signal here at the cross of +DI (green line) versus -DI (red line) and the main signal line (silver line) reads value over 25, we may consider this as yet another evidence of bullish pressure. So everything looks good here for the bulls. Until the strong support zone (marked in green) shown in the image below holds my short term view remains bullish here and I expect the price to move higher further after pullbacks.
On the H4 chart, based on the above-mentioned analysis my short-term view was bullish here and I was expecting the price to move higher further after pullbacks until the strong support zone holds. After the higher highs, the pullback that I was looking for happened with the price creating a bullish hidden divergence that has formed between the first low that has formed at 160.660 and the second low that has formed at 164.302 based on the MACD indicator, which we may consider as a fact provided by the market supporting the bullish view. Most importantly the price was holding above the strong support zone. The price then moved higher further as I expected it to and delivered around 330 pips move to the upside until it was blocked by a bearish divergence.
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
Traders Academy Club Team.
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