GBP/JPY is seen rising and testing the supply zone. Wait for sell opportunity as the price moves around that zone.

Hi fellow traders! GBP/JPY weakened on Friday's (March 24) trading session. However, the price has continued to rise and approach the supply zone throughout today's trading session. Therefore, look for sell opportunities when GBP/JPY moves around the supply zone.

gbpjpy

 

Analysis and Recommendation

Let's take a look at the following GBP/JPY H4 chart below: 

gbpjpy 2

From the H4 chart above, it has been pointed out that GBP/JPY is moving upwards. The pair is traded in an uptrend to test the supply zone between 161.48-162.20. Therefore, look for selling opportunities when a rejection pattern or bearish signal is formed around the supply zone.

However, be aware if there is no reversal pattern or bearish signal. The bullish GBP/JPY rally will continue if the level of 162.20 is successfully cleared. The breakthrough of that level will bring the pair to a higher supply zone, around 163.36-164.50. Here are two trading scenarios that can be prepared:

  • Therefore, set a short position at 161.48 when the price manages to enter the supply zone, and a bearish signal confirms it. Stop loss may be positioned at 162.20, while the profit target is at 160.30.
  • Alternatively, set a long position at 162.60 when a significant breakout signal confirms it. Stop loss may be positioned at 161.48, while the profit target on 163.36.

Keep in mind to always use risk and money management before trading! In addition, to make use of trailing stops, don't forget to exit the market as soon as you find a reversal signal!

GBP/JPY key levels:

  • Resistance: 164.50, 163.36, 162.20, 161.48
  • Support: 160.30, 159.45