GBP/JPY Finds the Crucial Resistance

The pair is known for its volatility, so that’s why, it’s one of the traders’ favorites but apart from that, it also respects technical analysis with a great accuracy.

First look on the daily chart and you can see two things: Major support and major resistance. The latter is more important right now as we just bounced from it! We’re talking about the 158 area (green), which already stopped buyers in October and January. It also stopped buyers yesterday, which allowed us to create a nice upper shadow on the daily candle. It’s nice but not spectacular though. The price didn’t manage to create a shooting star, which definitely would prove the bearish point. Nevertheless, as long as the price stays below the green area, the sentiment is negative.

After giving it a second thought, it’s really a wild thing to say that the sentiment is negative when we are close to long-term highs. Maybe yes but the thing is that we really are on a super strong resistance. I should maybe clarify it: Sentiment is negative in the short-term, as long as we’re below the green area. We have a legitimate chance for a correction, which may last maybe a few days.

In the long-term, the sentiment is still of course positive but again, buying just below a crucial resistance is not the most recommended trading practice in the world. Long story short, currently, the short-term sentiment is rather negative. The price bounced from a resistance and only its breakout will reopen a bullish sentiment for us. As long, as we stay below, sellers definitely have a chance to nibble some profits for themselves.

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