Not very often do we see a situation with all the technical factors pointing in the same direction. Usually, when you see setups like that, you should not hesitate and just trust the process. Ladies and gentlemen, here is a sweet price action setup on one of the most volatile pairs on the market – GBPJPY.
Today is the third day in a row that GBPJPY has been sharply on the decline. The price is retracing the surge from the 29th of August, when the price created an impressive bullish marubozu. The reversal is not a big surprise, as earlier that day the price met a super important resistance, which was a combination of four technical factors! The first one was the long-term upwards trend line (blue). The second one was the horizontal resistance (green area). The third one was the mid-term downwards trend line (black), and the fourth one was the correction equality pattern (grey rectangles). As you can see, this bearish list is pretty impressive here and sellers have all the arguments in their pockets now.
The sell signal will be denied if the price comes back above the green area, which for the time being, is not likely to happen. In the short term, we could experience a small bullish correction, but it will be really hard for buyers to turn the short-term take-profit action into a proper long-term reversal.