GBPJPY Falls As Price Sets To Retrace Downward To Discount

GBPJPY Analysis: Market Falls As Price Sets To Retrace Downward To Discount

GBPJPY falls as the price sets to retrace downward to a discount. The downward retracement began after the indication of the bearish divergence by the RSI (Relative Strength Index). Alongside the emerging diagonal resistance, GBP/JPY is declining into the discount zone, as indicated by the SMA (Simple Moving Average).

GBPJPY Significant Zones
Demand Zones: 176.440, 172.130
Supply Zones: 186.760, 191.990

Despite the ongoing downward price direction, the overall market trend is still bullish. The low of March formed at 158.250 during a significant correction in the early phase of the uptrend. The uptrend resumed afterward as the buying pressure from the discount drove prices upward. According to the RSI indicator, the market reached an overbought state when the price hit the previous resistance at 172.130. Owing to a need for a bearish correction from being overbought, GBPJPY made a short-term retracement to the downside. This led to the formation of a new low at 167.840 as the selling pressure was exhausted.

The bullish trend resumed after the formation of the low at 167.840. The uptrend continued until a major high formed on July 6, 2023. GBPJPY made another significant correction to the downside, entering into an FVG (Fair Value Gap) at a discount before continuing the uptrend. According to the RSI, a bearish divergence surfaced as the price formed a higher high at 186.760. The ongoing downward trend will likely continue until it reaches the discount zone.

Market Expectation

On August 21, 2023, the year’s high formed at 186.760. This was followed by a CHoCH (Change of Character) due to the invalidation of the 184.550 low. On the four-hour chart, the market’s order flow is now bearish. The downward trend is expected to continue until the old low at 180.510 is invalidated.