Price is now moving lower and into the next major long-term support level on the GBPJPY daily price action chart after breaking out of the daily support level. As the zoomed out chart shows below; price has now broken out of this major level on the daily chart and is crushing lower into the next near term level which comes in around the 150.70 area.
This pair is like a lot of Forex pairs just at the moment with price either making really large breaks or just attempting to make large breaks and we as price action traders need to take advantage by trading with this momentum not trying to fight it. We don’t want to be pushing against the really big and obvious flow of the market trends.
An obvious and clear example of this is how price has just once again played out on this chart. If you look at any chart you can see this pattern and order flow process repeating itself time and again, showing price making a strong move, pausing and then continuing with the strong momentum again.
Why does this happen and why will this continue to happen? And more to the point; why should we use this price action rule and trade with it rather than fight it? Price does this because it cannot keep going in straight lines. Price cannot keep moving and continue trading in strong trends without a break.
Traders take profit and exit the market. When they do this it causes the market to pause and consolidate and this is when you see the strong trend begin to slow and trade sideways. After all the profit takers have shaken out, this is when the strong momentum and trend will often then continue and price will breakout in the same direction it was first trading in.
The reason that price was trending in the first place is normally still valid. After the consolidation, price continues and makes the next strong move. I discuss this market move and market rule in the lesson at;
Price Action Guide to How the Market Moves
NOTE: Make sure if you have not done so already to check out my new lesson just published that teaches you a trading exercise to work on perfecting your trade management and learning how to enter your trades from ‘value’ areas.
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Daily GBPJPY Chart – Zoomed In
Daily GBPJPY Chart – Zoomed Out
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