GBPJPY Braces for Drop as Prices in the Supply Zone Consolidate

GBPJPY Analysis: Price Consolidates At a Supply Zone, as the GBPJPY Market Braces For Further Decline

GBPJPY braces for more decline as prices consolidate at the supply zone. The supply area at 162.330 appears to repel an upward price expansion. On December 29, 2022, the supply zone issued its first denial. If the supply zone is still invalidated, the price may decline until it breaks the previous low at 155.350.

GBPJPY Significant Zones
Demand Zones: 155.350, 148.630
Supply Zones: 162.330, 172.130

On the daily chart, the market’s order flow is bearish. The 171.210 and 164.190 price levels served as the boundaries of the first trading range as the price started to fall from the 172.130 supply zone. After retracing to the ideal trade entry at the 70.50% Fibonacci retracement level, the GBPJPY maintained its downward trend. As a result of the abrupt fall from the Fibonacci retracement level, it appears that purchasers of the GBPJPY are taking partial gains near the -127% level. The GBPJPY entered a bearish order block that had formed just below the supply zone at 162.330 while the market was retracing upward.

Due to the enormous accumulation of sell orders in the bearish order block, the possibility of a correction is constrained. It was harder to break the 162.330 level after the buy-side liquidity grab because the GBPJPY started to fall. The market plummeted into a liquidity pool for Stop Hunt. Then the market structure turned to the downside from the 172.130 supply zone. The price shot up into the 172.130 supply zone after this “stop hunt” at a discount.

Market Expectation

The market just broke out of a consolidation phase on the four-hour chart. The consolidation zone, which was in the form of a triangle pattern, could not break upward due to the bearish order block at its top. GBPJPY is expected to continue downward from here without breaking the 162.330 resistance.