GBPJPY heading towards critical low, cautious traders wait

The GBPJPY bears have taken control over the market after the pair hit the major resistance level at 156.06. Majority of the long traders went short, after the pair break below the major support level at 150.14. Though bulls tried to recover its loss eventually the market made lower highs which is a clear sign of losing bullish momentum. Currently, the pair is slowing heading towards the 38.2% Fibonacci retracement level. Before the pair hit major support level at 145.40, the bears must take out the low of 4th March 2018.

GBPJPY daily chart analysis

Figure: GBPJPY heading towards 38.2 Fibonacci retracement level

From the above figure, you can clearly see the bulls have lost control of the market. The nearest support level for this pair lies at 145.40. Most of the professional long-term traders will be looking for bullish price action confirmation signal to execute long orders near the 32.8% Fibonacci retracement level. The aggressive traders are advised not to set any pending orders since it the current momentum of the market is extremely bearish. We might see some false spike down below the 32.8% Fibonacci retracement and setting pending long orders near the 142.50 level might work for the short-term traders. If the bulls manage to take control of this market from that support level, the pair will eventually head towards the next resistance level at 153.31

GBPJPY weekly chart analysis

Figure: GBPJPY heading towards 100 weekly SMA

In the weekly chart, the bears seem very strong and the recent downfall is not completed. Currently, the pair is heading towards the 100 weekly support level at 143.15. This level is very crucial for the long-term investors. A clear break of the price below the 100 weekly SMA will confirm the end of a medium-term bullish rally of this pair. This will eventually lead this pair towards the next major support level at 135.84. From this level, we might see some decent bullish bounce. But executing long orders without any bullish price action confirmation signal will be an immature act. A clear break of the major support level at 135.84 will ultimately lead this pair towards the low of 9th October 2016. On the contrary, we need to have a weekly closing below the 100 SMA to see some bullish rally.

Considering the daily chart the pair trading near a major support level. But the recent bearish momentum suggests the bulls stay away from the market. We might see some extended bearish rally in the starting of this week. When it comes to the weekly chart the bears have still plenty of room to drop below the current price level. In the absence of definite bullish reversal signal in the weekly time frame, it’s better not to look for short-term long trade setup. On the contrary, executing long orders near the 38.2 Fibonacci retracement level with bullish price action signal might pay off to the aggressive traders.