GBP/JPY Price Analysis: Bears to restest the daily W-formation's neckline
|- GBP/JPY bears stepping in at key resistance.
- GBP/JPY is in bearish conditions on the 1-hour chart.
GBP/JPY is offering a high probability trading setup on the daily and hourly time frames within a weekly bearish environment below key resistance.
The following is a topdown analysis that illustrates the conditions for which justifies the bearish bias.
GBP/JPY weekly chart
The weekly outlook is bearish towards the prior resistance that would be expected to now act as support.
GBP/JPY daily chart
However, for the meantime, the daily chart's W-formation's neckline would be expected to be retested which creates an immediate trading opportunity on the short side from lower time frames.
The 1-hour time frame would be ideal.
Note, there is also a confluence of the neckline and a 61.8% Fibonacci retracement of the latest bullish impulse.
We had the same scenario on the weekly chart as follows:
A restest of the W-formation's neckline then resulted in an upside continuation.
GBP/JPY 1-hour chart
From a 1-hour perspective, the opportunity arises on a restest of old support that would be expected to act as resistance from which bears can target the confluence of the neckline of the daily W-formation and a 61.8% Fibonacci retracement.
The trade set-up would be as follows for a 1:2 risk to reward:
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