GBPJPY Sellers Defend 147.00 as New Resistance

by Justin Bennett  · 

October 22, 2018

by Justin Bennett  · 

October 22, 2018

by Justin Bennett  · 

October 22, 2018

Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.

Click here to get access to the same charts I use.

GBPJPY is trading lower today after retesting an area we’ve had our eye on for several weeks. The 147.00 region served as resistance back on August 1st until buyers cleared the level on the 18th of September.

For the next three weeks, 147.00 attracted buyers on each retest. However, descending channel resistance from the year-to-date high was putting pressure on the risk-sensitive cross. It’s why I titled the October 8th post the way I did.

I also mentioned the weekly engulfing range that developed a couple of weeks ago. But the signal went unnoticed by most amid all the back and forth price action on the daily time frame.

Those who caught a 50% retracement of that weekly engulfing candle were able to enter short on October 16th at 148.33. Those shorts are now in profit by more than 200 pips. What’s more impressive is that a 148.33 entry suffered a mere seven pip drawdown.

GBPJPY weekly channel

This is why I’m a fan of using 50% entries on candlestick patterns such as the pin bar and engulfing bar. And it works exceptionally well on structures that develop on the weekly time frame.

From here, GBPJPY will likely remain under pressure while below 147.00 on a daily closing basis (I use a New York close chart so that each session closes at 5 pm EST).

Key support isn’t far away at 145.50. You can see how this area served as support in late July and later acted as resistance in late August and mid-September.

It’s going to take a daily close below 145.50 to expose the next key area at 142.80. However, this region is a little more tricky than 145.50. I would argue that 142.80 could extend as high as 143.80 given the lows in May and June as well as the early September gap.

As long as this 2018 descending channel is intact, there’s a good chance we could see GBPJPY trading near the 140.00 handle later this year. Just be sure you prepare for volatility given the ongoing Brexit negotiations combined with the yen’s sensitivity to risk.

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GBPJPY daily time frame

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