GBPJPY Long Continuation?
Weekly Analysis
• Trend & Structure: GBP/JPY remains in an ascending parallel channel on the weekly timeframe. Previously, a rising wedge pattern (May 8 – July 8) was broken, leading to the current consolidation phase. The structure remains higher high (HH) and higher low (HL), but a prior lower high (LH) has not been broken, indicating consolidation within an overall bullish trend.
• SMAs: SMAs are stacked bullishly, suggesting a long-term uptrend. However, the 10 SMA is slightly below the 50 SMA, indicating a lack of immediate momentum and signaling potential consolidation.
• Key Levels:
• Support: Horizontal support at 170, coinciding with a bullish order block.
• Resistance: Horizontal resistance at 203, with a bearish order block near 204.
• Additional order block observed between 196-197.
• Indicators:
• RSI: At 48.78, pointing downward after rejecting off its RSI-based moving average. A trendline on RSI suggests a potential move toward 44 before resuming upward momentum.
• MACD: Deep red histogram, with MACD and signal lines near zero, reflecting weak momentum.
• ADX: Negative DMI (24.79) above Positive DMI (19.49), with ADX at 15.16, indicating consolidation with a bearish tilt.
• ATR: Stable at 4.355, showing low market volatility.
• Ichimoku Cloud: Price is inside or slightly below the cloud, indicating uncertainty and a bearish bias for now.
• OBV: Decreasing trend, suggesting distribution.
• Fibonacci: Price reacted off the 0.5 extension level near 195, rejecting downward after bouncing from the lower channel line at 190.
Daily Analysis
• Trend & Structure: Consolidation with a slight bullish tilt. The price is in a sequence of higher lows (HLs) and lower highs (LHs), currently forming a new lower high.
• Key Levels:
• Support:
• 192.5, recently confirmed by price rejection.
• 188, lower-level support.
• Resistance: 200, aligning with historical resistance.
• Order Blocks:
• Bullish order block at 191 (aligned with the lower weekly channel).
• Bearish order block at 196.5-198.
• Additional bullish order block at 185.
• SMAs: Price is below the 200 SMA and currently sits only above the 10 SMA, with the 50 and 100 SMAs acting as resistance. The SMAs suggest consolidation.
• Indicators:
• RSI: Declined from 53 to 47 but remains above its RSI-based moving average.
• MACD: Bullish histogram (green), but both MACD and signal lines remain below zero.
• ADX: Positive DMI slightly above Negative DMI, but ADX at 17.63 is sloping downward, indicating weak momentum.
• ATR: Stable at 1.79, showing minimal volatility.
• Ichimoku Cloud: Price broke below the cloud, rallied back, and rejected off it, reflecting bearish momentum.
• OBV: Consolidating, no clear trend.
• Fibonacci: Price rejected off the 0.5 Fibonacci extension level, aligning with the Ichimoku cloud area, and is now below the 0.382 level.
4-Hour Analysis
• Trend & Structure: Price has been in a parallel ascending channel but recently broke below the lower channel line and is retesting it. The structure remains higher high and higher low but shows signs of weakening.
• Key Levels:
• Support: 190.3, coinciding with a bullish order block.
• Resistance: 193.5, which aligns with the channel top and a bearish rejection area.
• Indicators:
• RSI: At 52.43, rebounding after breaking a descending trendline.
• MACD: Bearish histogram (red) is waning, and MACD lines are above zero.
• ADX: At 22.07, with Negative DMI above Positive DMI, suggesting a slight bearish tilt.
• ATR: Stable at 0.796.
• OBV: Consolidating with no clear trend.
• Ichimoku Cloud: Price is finding support on the cloud after rejecting the cloud resistance during the prior rally.
2-Hour Analysis
• Trend & Structure: The 2-hour chart mirrors the 4-hour ascending channel, and the price has rejected off the 200 SMA and is hovering near the lower channel line.
• Key Levels:
• Support:
• 192, key bullish order block.
• 189.7, deeper support level.
• Resistance: 194.5, recent rejection area.
• Indicators:
• RSI: At 49.89, rebounding after hitting a low of 40.76.
• MACD: Multiple prints of waning bearish momentum, with MACD and signal lines above zero.
• ADX: At 20.61, with Negative DMI above Positive DMI, suggesting consolidation with a bearish tilt.
• Ichimoku Cloud: Price remains above the cloud, finding support.
Market Bias and Outlook
Bias: Bullish consolidation. The overall trend remains bullish as the higher timeframes show an intact ascending channel structure. The recent bearish movement appears to be a liquidity grab after bullish breaks of structure.
Fundamental Note: The Bank of Japan’s recent rate hike may introduce short-term bearish pressure on GBP/JPY. However, the market appears to have partially priced in the news. Unless a confirmed break of structure occurs to the downside, the primary bias remains bullish with consolidation.
Key Levels and Setup
• Weekly Support/Resistance:
• Support: 170, 190-192 (bullish order blocks).
• Resistance: 196-197, 200-204 (bearish order blocks).
• Daily Support/Resistance:
• Support: 188, 192.5.
• Resistance: 196.5-198, 200.
• 4-Hour/2-Hour Order Blocks:
• Bullish: 190.3-192.
• Bearish: 193.5-194.5, 196-197.
Trade Plan
1. Wait for Price Action to Recover Ascending Channel:
• Monitor for bullish momentum resumption on the 4-hour or 2-hour chart, such as:
• RSI moving above 50.
• MACD printing green momentum.
• ADX showing a rising Positive DMI.
2. Entry Criteria:
• Primary Entry: Retest and bounce off the lower channel line (190.5-192).
• Secondary Entry: Break above 193.5, confirming bullish momentum, targeting 196.5-198.
3. Stop Loss (SL): Below 190, considering the order block.
4. Take Profit (TP):
• TP1: 196.5-198.
• TP2: 200-203 (weekly resistance zone).
Conclusion
GBP/JPY remains bullish but is consolidating. The current structure suggests a potential resumption of upward momentum after liquidity grabs at support levels. Caution is warranted due to fundamental influences from the Bank of Japan’s recent policy decisions. Monitoring key support levels and waiting for bullish confirmations will provide the most favorable risk-to-reward opportunities. Stay tuned for precise entries as momentum resumes.
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