Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.
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The GBPJPY is approaching a key inflection point on the 4-hour time frame. On Sunday, I pointed out last week’s retest of former channel support that extends from the 2017 low.
However, buyers weren’t ready to give in just yet. This week’s bounce from the 147.00 area shows there’s still some strength to work through before the next leg lower can materialize.
A look at the 4-hour chart shows a level that could signal weakness if broken. The short-term trend line from the May 29 low is under pressure as I type this, and although it’s holding as support, buyers appear to be struggling.
Patience is usually the best course of action in situations like this. The GBPJPY is either going to close back above former channel support from the 2017 low or below short-term trend line support.
If it’s the former, we could see the pair trend higher. If sellers manage a close below this trend line, though, it may signal the start of the next push lower.
Keep in mind, however, that the 147.00 area could attract a few buyers on the way down. A daily close below that would re-expose the next key support at 144.00.
As long as the pair remains below former ascending channel support near 148.20 on a daily closing basis (New York close charts), I will stay bearish the GBPJPY. That said, I need to see more from sellers before I commit any capital to a position.
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