*Live market analysis with trading opportunities on the GBP FX currency*
Welcome back to the blog. In this blog post I am going to share my current thoughts and analysis for the GBP currency and show you how I plan to trade it this week and through the coming weeks. Let’s start by looking at the daily timeframe charts for Cable (GBPUSD) and GBPJPY. You will see shortly why I am looking at two Pound FX currency pairs.
As always, my technical analysis and charting is done using the TradingView platform which really is a fantastic piece of software. It is cloud based, accessible form any phone or computer device and has all the functionality I need and more. Click on the link below to visit their website.
Initially, when analysing the GBP currency I used the GBPUSD currency pair. I have been watching this pair for a while and the recent 2 weeks of bullish movements have me excited because I can see that price is beginning to approach the 1.26200 resistance zone. In this area there is also the daily 200EMA.
I have been patiently waiting for price to reach this zone because I believe it could provide a good short trade entry if price was to reject it for a 3rd time. This is because of the expanding wedge pattern that is potentially forming which means there is a possibility for new lower lows to be made and a much larger down move for this to pattern to be completed. This would give an excellent reward:risk ratio trade position.
The 4hr chart below shows this theory.
A 3rd touch rejection of 1.26200 would be a good short entry signal and if the expanding wedge pattern was to occur, then this next bearish leg could provide over 700 pips to make new lower lows. This is using the lower trendline across the 2 previous lows and the nearest whole number level. This is just a prediction.
However, when looking at the GBP currency in general I looked at the GBPJPY FX currency chart and I believe it is showing a better opportunity than Cable.
As you can see on the daily timeframe chart above, price is already at the daily resistance level of 135.500 and is showing signs of rejecting it on the lower timeframes. The rest of the technical analysis is very similar to the Cable charts shown but there is also a much larger bearish trend still present on GBPJPY. The lower highs and lower lows of this trend are marked on the chart above.
The chart above shows the 4hr intraday timeframe and as you can see, price is already rejecting the resistance zone this morning. If this continues then I believe GBPJPY will head back down to the bullish counter trendline to retest that.
Look for a 4hr bearish rejection candle (or multiple candles) to close below the 135.500 before entering any positions if you want to lower the risk of this trade not working.
If that trendline and the 4hr 50EMA is broken then I see no reason why new lower lows at 128/127.500 aren reached over the next few weeks. It took 17 day for price to climb from the last lows at 129.500 up to the current levels so as this next bearish wave might be larger, I can see it taking longer to drop.
From a fundamental perspective I prefer the GJ trade because the USD currency and US markets are showing extreme volatility right now vs the Yen and I think this might only get worse. Political tensions, nationwide rioting and protests and the US vs China trade war is likely to return soon swell leading in to the 2020 elections.
The technical analysis of both currency pairs are very similar but by trading GBPJPY instead of GBPUSD, I think one can prudently remove unnecessary volatility from the trade and produce better returns.
As always, it is good to have a contingency plan. The chart below shows my “plan b” for trading GBPJPY.
If the 135.500 resistance zone doesn’t hold price down then there is good potential for more upside. If a breakout occurs then I will look for the retest of the resistance (would then be support) and I will enter a long position. See the arrows on the chart above.
This is an example of basic support and resistance trading which I have covered multiple times on this blog. Some of the articles explaining support and resistance zone trading can be found via the links below.
If you are interested in learning more about technical analysis, FX currency markets, financial market fundamentals or even my trade management strategies then you should seriously consider purchasing my Mastering The Markets – Retail Trading Course.
All my technical analysis is done using the TradingView platform. You can get access via the link below.
My preferred broker of choice is IC Markets. Low spreads and trading costs really help long term profitability. A link to their site is below.
FTMO Trader Funding Programme.
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DISCLAIMER: None of the information posted on this site is to be considered investment/financial advice. Trading is high risk and you should only trade with money you can afford to lose.