FX.co ★ ckerluke | GBP/JPY

D1 timeframe chart – currency pair GBPJPY. On this higher timeframe the wave structure is forming an upward sequence. The MACD indicator is in the upper buy zone, but already below its signal line. The rise that has been gradually happening here looks technically justified. In February there was a downward wave that renewed the previous low and managed to consolidate below the support level of 209.47. Below that level the price was treading water for many days in a row, apparently accumulating sellers. Without giving them a chance to profit, the level was broken upwards again and changed its status to support. Then there was a pullback to it and a new rise. I assumed that the rise would go beyond the highs that were in January–February, they are almost at the same level. March turned out mostly sideways and at the end of it they gave a decline and some hope to sellers. On the way down, the strong level 209.47 again stood in the way and did not let the price go further down. In April they dragged the price up again and still broke above the highs. There followed profit-taking on longs and new shorts, since the area beyond the peaks was a potential sell zone. Now on the price’s path there is a horizontal support level at 213.22. It can quite well become a base for a new rise with an update of the new high; the overall uptrend hasn’t gone anywhere. If sellers manage to push the price below this level, then further down there is another obstacle on the way – an ascending trendline drawn through the nearest wave lows. Of course, growth cannot continue indefinitely; on the highest monthly timeframe there is a bearish divergence on MACD, which is a very rare phenomenon given the scale of that large monthly chart. Also on the weekly timeframe there is now a divergence after the peak was renewed. And this whole set of bearish signals played out with a sharp drop of more than 600 points on the last day of April. And now the situation here is unclear: after such a collapse the price may again get stuck in a sideways range for a couple of weeks. There is an ascending line and the 213.22 level, which is more of a broad support zone. At the same time, the divergences on the monthly and weekly do not add optimism for buyers. For now, in my view, GBP in the broader market is more inclined to sag, and here some drawdown also started, but again everything was driven back into the middle and no clear priority is visible. It seems there is still more inclination to test the upside. But the price was driven back into the middle again and there was uncertainty here. From the level they made a bounce down, ran into the ascending line, resulting in a squeezed position where you can’t enter yet. As long as the line wasn’t broken, it was premature to sell, and as we can see, it was indeed worth waiting with shorts. The price was pushed above the top and this is a potential sell zone. I think that for now on the lower timeframes it is already possible to look for short entries. Although it would be more reliable if a mirror level formed at the edge of the rise, which is not there yet.