The GBPJPY has rallied sharply due to a combination of market manipulation from the Bank of Japan as well as a short covering rally which lifted the Pound Sterling. This currency pair has formed a rising wedge formation as visible in the H4 chart. Price action is currently centered at ascending support levels with a pending breakdown of the chart formation imminent. We call this currency pair lower from current levels amid profit taking.
MACD has formed a negative divergence and does not confirm the higher highs set by this currency pair. Momentum has started to decelerate which confirms the pending breakdown. RSI has formed a negative divergence as well and has been trading in extreme overbought territory for an extended period of time.
We recommend a short position at 153.00 with a potential second entry level at 154.00. We also recommend trader to place a stop buy order at 153.50 in order to hedge their open position.
Traders who wish to exit this trade at a loss are advised to palace their stop loss level at 153.50. We will not utilize a stop loss level and execute the trade as recommended. Place your take profit level at 148.00.
Here is why we call the GBPJPY currency pair lower
- GBPJPY has formed a rising wedge formation and has overextended its rally without a correction
- Price action is centered around support and is pending a breakdown
- MACD has formed a negative divergence and momentum started to fade
- RSI has formed a negative divergence RSI has traded in extreme overbought territory for an extended period of time
- Profit taking
