GBP/JPY is in a corrective move toward the supply zone. Watch for a short signal if the price fails to cross the area.

Hi fellow traders! GBP/JPY is rising due to correction from the bearish trend. The supply zone around 158.37 becomes the nearest resistance, so a short opportunity will appear if GBP/JPY is corrected into the supply zone.

gbpjpy

 

Analysis and Recommendation

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

gbpjpy 2

Based on the H4 chart above, it has been pointed out that GBP/JPY is rising toward the supply zone of 158.37 – 159.88. Considering that GBP/JPY is still bearish, a short position in the supply zone is the main scenario you can do. This pair is expected to wear out again towards the demand zone of 154.35 – 152.90 if rejected from the supply zone.

Be aware if there is no sign of rejection after the price enters the supply zone of 158.37 – 159.88 since GBP/JPY has the potential to continue rally towards a higher supply zone around 161.85 – 163.00 as long as it is able to pass through the 159.88 level.

  • Therefore, set a short position at 158.37 when the price manages to enter the supply zone and a bearish signal confirms it. Stop loss may be positioned at 159.88, while the profit target on 154.35.
  • Alternatively, set a long position at 159.88 when a significant breakout signal confirms it. Stop loss may be positioned at 158.37, while the profit target on 161.85.

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: 163.00 (psychological level), 161.85, 159.88, 158.37
  • Support: 156.00 (psychological level), 154.35, 152.90