On Sunday I discussed how GBPJPY closed back below a certain key level before the weekend.
That level is descending channel resistance from the year-to-date high.
But before we dig into that, let’s take a look at the broader market structure.
Here’s a view from the weekly time frame:
We have two patterns at work. The first is an ascending channel that broke down in May. We looked at that breakdown several times earlier this year.
The second structure is a descending channel that extends from the year-to-date high. You can see where sellers defended resistance at 148.00 last week.
If we drop to the daily time frame, we can see where GBPJPY came under additional selling pressure during yesterday’s session.
However, so far today, buyers have reversed that trend in volatile fashion.
This latest intraday rally has also closed the weekend gap that developed. Monday’s high came close to reaching Friday’s close at 147.66, but most brokers I checked showed buyers fell short.
So now that the weekend gap is closed and the pair is testing the 148.00 area, is it a good time to sell?
Not in my opinion it isn’t.
The bullishness of today’s move would be a concern for me if I were looking to sell. After all, GBPJPY was just up nearly 300 pips on the day.
I think a better approach would be to wait for today’s session to close. That way you aren’t entering in the midst of this intraday volatility.
It would also allow you to see whether or not that 148.00 area I mentioned on Sunday will act as resistance. We won’t know that until the 5 pm EST close.
If you aren’t using New York close charts, you can go here to get instant access to the same charts I use.
A daily close below the 148.00 area would keep it intact as resistance. A close above it would re-expose the 149.30 horizontal area.
Keep in mind that levels like this descending channel top can also break down over time. In other words, it can lose significance in the eyes of the market.
If a market invalidates a level enough times, I may remove it from my chart entirely.
But right now, I see this as a “wait and see” scenario. We don’t yet have enough information to make a decision one way or the other. Perhaps the daily close will shed some light on things.
When in doubt, wait it out. The saying is a little cheesy, I admit, but it rings true in situations like this.
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Important: I use New York close charts so that each day closes at 5 pm EST.
Click here to get access to the same charts I use.
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ITS TRUE BOSS I WILL PATIENTLY WAIT
Thank you for the analysis and the insight on this.. But what do you mean when you say you take it off from your charts entirely? Do you mean you won’t trade it or what
I mean I’ll remove it from my chart. 🙂
If a market stops respecting a level, why keep it around?
I’m not saying that’s what I’m doing here. I merely put it out there as an option just in case.
You say “if a market invalidates a level enough times, I may remove it from my chart entirely” but if I may ask, how many times is enough times?
It depends. There’s no magic number.
Lol oryt I get you but am looking at it now we few hours away from 5est daily close and it’s promising to close Below the key resistance stance 148.000
Would you disregard 147? looking on the weekly now that level seems to not have as much significance as the 149.3 level (Triple top level)From a swing point of view It has been difficult to trade from 147 in recent times. however 149,3 has been a beautiful level for shorts.
Perhaps.
Another informative post Justin many thanks..
Could u also post an update on that OILUSD that you’ve been keeping an eye on lately.. it has developed interestingly over the past few weeks
Oil is a runaway train at the moment. It did reach our last target at 58.00 though. I’ll provide an update if something catches my attention.
Thanx 😆
You’re welcome.
It’s looking good price has reached major resistance perhaps after a high test candle we could get a chance to short the pound.
GbpJpy is at 50% retracement of September high to October low.
September low to October high.
Not yet just wait and see
Thank you Justin..
Now we wait for the market to give us a signal.
I see an ascending channel that touches august 15 and October 26 2018 as support levels
now its good for sell ??
That’s a decision you need to make.
Another good one, Weldon.
Thanks, Yusuf.
Hi Justin, if you see it break above 148 level with the first bullish bar, do you need other reason to before you place your order? Other reason can be material fundamental news/event on the imminent BREXIT
It would take a lot more than that for me to buy. And I don’t use economic events/data to make decisions.
Been keeping an eye to this sucker, I came to notice, the pair looks like it has formed inversed H&S though… Or Am I wrong?
Maybe.
lol and indeed i was wrong… I guess I should just stick with your opinions, not mine 😀 Ha Ha
Forming your own opinion is important. That way you can use these posts to proof your work. 🙂
I’m staying away until daily close at 5pm Est. Theresa May needs to seal the deal!
Thanks alot sir
I have sell from 148 and 147 gbpjpy now don’t know to close or wait plz advice thanks
You’re welcome.