Market Analysis: Price Aims to Fill the 4-hour Fair Value Gap
GBPJPY exhibited a robust bullish trend, as evidenced by the consistent formation of higher highs and higher lows, breaching the notable 186.090 threshold. This upward trajectory was further intensified as the pair approached the critical 200.500 level characterized by a swift ascent to this significant price point. However, upon reaching this peak, the GBPJPY experienced a sharp pullback, retracing to the underlying trend support.
GBPJPY Significant Zones
Resistance Levels: 200.500, 195.270
Support Levels: 190.850, 186.090
This retreat price encounter was not the end of the bullish efforts, as the pair once again made strides toward the 200.500 level. The retest of this price zone has led to the emergence of a double-top pattern, a classical technical formation that often precedes a reversal or at least a considerable downturn in the market. This pattern holds particular significance as it marks the 200.500 level as a formidable resistance point in GBPJPY.
The daily Relative Strength Index (RSI) has entered the overbought territory, suggesting that the pair may be poised for bearish momentum in the medium term. This aligns with the anticipation of a bearish reversal following the double-top formation. Conversely, the 4-hour RSI presents a contrasting view, with readings in the oversold region. This discrepancy suggests that while a longer-term bearish outlook may be developing, there is still room for a short-term bullish correction.
Market Expectation
The 4-hour correction is anticipated to result in a rally to fill the identified 4-hour Fair Value Gap before the larger bearish trend potentially resumes.
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