GBPJPY Initiates Downward Correction to Facilitate Discount Return

GBPJPY Analysis: The Market Begins A Downward Correction As Price Needs To Return To Discount

GBPJPY begins a downward correction as the price needs to return to a discount. Following the exuberant rally, the price finally made a downward correction. A rally formed in response to the invalidation of an inverse head-and-shoulder pattern. Since then, the market’s order flow has been bullish.

GBPJPY Significant Zones
Demand Zones: 172.680, 155.350
Supply Zones: 184.010, 188.810

With prices swirling about the neckline of the head-and-shoulders pattern, this showed that the previous downward trend was ending. GBPJPY gained more buying momentum as it successfully invalidated the neckline. According to the MA Cross, the market’s structure shifted to the upside a few days after the breakout. Similarly, the RSI (Relative Strength Index) has been above the 50.0 level since April 2023. This indicates the dominance of the bulls in the market as more GBPJPY sellers exited the market. On the third trading day of February 2023, the price made a bullish move from the discount zone.

The bullish move came after the creation of a swing low. This swing low is higher than the low of the right shoulder. GBPJPY kept creating higher highs and higher lows as the bulls took control of the market. Another swing low formed on March 25, 2023, at the discount zone with a bullish hammer candlestick. On March 10, 2023, GBPJPY barely created a swing low on the daily chart until hitting the 184.010 resistance. Therefore, the current trading range of the market is between 167.840 and 184.010 price levels. A breakout from the trading range would signal the end of the downward trend.

Market Expectation

On the four-hour chart, GBPJPY is bearish. The market flipped bearish following the Change of Character (CHOCH) that occurred after the bounce of the 184.010 resistance. Until the daily bullish order block is reached, the market is expected to remain bearish.

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