- GBP/JPY is overstretched and bears are taking the reins on the lower time frames.
- The longer-term prospects are also bearish and charts are in need of a significant correction.
GBP/JPY is succumbing to bearish pressures as the multi-timelines are aligned and indicating a significant correction.
The following is a top-down analysis that illustrates where the next opportunity would arise on the downside.
Monthly chart
The month is drawing to a close in a fourth consecutive month of higher highs and lows.
The W-formation is a bearish pattern and a significant retracement, at least to the 38.2% Fibonacci that has a confluence with old resistance, would be expected.
Weekly chart
The weekly chart is overstretched into the supply zone and a significant downside correction, in line with the W-formation on the monthly chart, would be expected.
Daily chart
The daily chart is showing that the bulls are failing to break higher within the weekly supply area.
A downside correction to old liquidity and resistance would have a confluence with the 61.8% Fibonacci of the latest bullish impulse.
4-hour chart
The 4-hour chart is on the way to test old support.
A break of old support and the 21-SMA opens prospects of a downside continuation to the 61.8% Fibo of the daily bullish impulse.
1-hour chart
The hourly chart has already tested the support area in what would be expected to be the start of a significant and medium-term bearish correction.
Should the price correct the recent bearish impulse from the supporting area, then a retest of prior support, or the neckline of the M-formation where a confluence of the 50% and 61% Fibos, is anticipated.
At such a point that the price is resisted there, bears can look for a downside continuation opportunity from bearish conditions and structure for an optimal entry point on the 15-min chart.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds gains above 1.0700, as key US data loom
EUR/USD holds gains above 1.0700 in the European session on Thursday. Renewed US Dollar weakness offsets the risk-off market environment, supporting the pair ahead of the key US GDP and PCE inflation data.
GBP/USD extends recovery above 1.2500, awaits US GDP data
GBP/USD is catching a fresh bid wave, rising above 1.2500 in European trading on Thursday. The US Dollar resumes its corrective downside, as traders resort to repositioning ahead of the high-impact US advance GDP data for the first quarter.
Gold price edges higher amid weaker USD and softer risk tone, focus remains on US GDP
Gold price (XAU/USD) attracts some dip-buying in the vicinity of the $2,300 mark on Thursday and for now, seems to have snapped a three-day losing streak, though the upside potential seems limited.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.
US Q1 GDP Preview: Economic growth set to remain firm in, albeit easing from Q4
The United States Gross Domestic Product (GDP) is seen expanding at an annualized rate of 2.5% in Q1. The current resilience of the US economy bolsters the case for a soft landing.