Hello traders! Below is the GBP/JPY currency pair on the 4-hour timeframe. Clearly the ascending channel has been broken, after which price corrected up and currently finding the resistance at the lower trendline fo the channel.
We are likely to see some range trading between 135.40 and 134.50 for the time being, but overall, the trend starts to look bearish.
The 1-hour chart also shows the potential breakout of the smaller descending channel. However, the price still hasn’t broken it, and this actually suggests the beginning of the consolidation phase. We can also see the clean bounce off the 61.8% Fibonacci retracement level at 135.40. This level has been rejected twice providing a strong resistance area.
As long as this area is being respected, we can expect GBP/JPY to break to the downside, and penetration of the ascending channel on the 1-hour chart could be the confirmation of the downtrend. In this scenario, price is expected to test one of the Fibonacci support levels, with the final target being at 131.90.
Bias: Bearish while below 135.40
Potential Resistance Zone: 135.40 – 135.45
Potential Targets: 134.51, 134.13, 133.74, 133.27, 132.87, 131.90
Have a profitable trading!