GBP/JPY is being corrected and testing the demand zone even though the daily trading bias is still neutral. Opportunity to buy may appear in the demand zone.
Hi fellow traders! GBP/JPY is seen moving towards the demand zone of 159.25. Even though the daily trading bias remains neutral, GBP/JPY has the potential to open long as long as there is confirmed bullish movement around the demand zone.
Analysis and Recommendation
Let's take a look at the following GBP/JPY H4 chart below:
Based on the H4 chart above, it has been pointed out that GBP/JPY is declining to test the demand zone of 159.25 – 158.65. When this analysis was written, there was slight resistance from the buyers who wanted to try to lift the price back toward the supply zone of 161.00 – 162.00. Thus, the opportunity to open long will appear if there is a confirmed bullish signal around the demand zone.
Be aware if there is no bullish signal when testing the demand zone since GBP/JPY can continue to wear out below the level of 158.65. Such a move could trigger a decline toward a deeper demand zone.
- Therefore, set a long position at 159.25 when the price manages to enter the demand zone and a bullish signal confirms it. Stop loss may be positioned at 158.65, while the profit target on 161.00.
- Alternatively, set a short position at 158.65 when a significant breakout signal confirms it. Stop loss may be positioned at 159.25, while the profit target on 157.77.
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: 162.00 (psychological level), 161.00 (psychological level), 160.00 (psychological level)
- Support: 159.25, 158.65, 157.77, 157.05