GBPJPY At the Top? Massive Liquidity Grab

Jun 9

📈 1. Price Action & Key Technical Levels (Daily Chart)

Price reached a major supply zone between 196.0 and 197.0, showing clear rejection (weekly pin bar and a lower high structure relative to the previous peak).
The long-term descending trendline acted as resistance again.
A confirmed rising wedge pattern broke to the downside, with first target around 191.4, and extended target near 187.4 (key demand zone with historical confluence).
Weekly RSI shows a bearish divergence vs price highs – an additional signal of bullish exhaustion.

📊 2. COT Data (as of June 3, 2025)

GBP (British Pound)
Net long positions increased by +30,371 contracts (Commercial + Non-Commercial).
Non-Commercials: 103,672 long vs 68,457 short → net long +35,215 but the increase is relatively modest.
Commercials are increasing both long and short positions, but the net delta supports medium-term GBP resilience.

JPY (Japanese Yen)
Net short worsened by -13,566 contracts.
Non-Commercials are cutting longs and adding shorts → aggressive yen selling.
Commercials remain heavily short (275,659 vs 100,151 long).

➡️ COT Conclusion: GBP remains structurally strong, but the JPY is now extremely oversold, increasing the likelihood of a technical correction in favor of JPY (GBPJPY pullback).

📉 3. Retail Sentiment
72% of retail traders are short GBPJPY, with an average entry at 191.2.
Current price is above 195.8 → a liquidity sweep above retail shorts may have already occurred.
The order book shows a heavy sell cluster between 195.0–195.9 → potential zone of manipulation/liquidation.

➡️ Contrarian view: After sweeping liquidity above retail highs, we may now see downside pressure to clean out breakout longs.

📅 4. Seasonality
June tends to be neutral to bearish:

5-year average: +0.45% (weak gain)
10- and 15-year averages: -1.24% and -1.30%
Historically, the first 10 days of June often mark a local top, followed by a decline – consistent with the current price structure.
🧠 5. Macro-Technical Confluence
The broader setup points to a distribution phase between 195.5–196.5, with high probability of a technical pullback toward 193.5–191.4 in the short-to-medium term.
The yen's oversold conditions may ease temporarily, supporting a corrective GBPJPY retracement.
Break below 193.5 would confirm the move toward 191.4 and eventually 187.4 – an area of institutional interest.

🔍 Trade Setup Summary (Bias: Bearish)

Technical context: Short setup confirmed by structure break, divergence, and supply rejection.
Macro/sentiment context: Supports a corrective pullback on the pair.
Strategy: Look for intraday weakness below 195.0–194.5 → targeting 193.5, then 191.4.
Invalidation: Daily/weekly close above 197.0.

3 days ago

Trade closed manually

I tried to open a short trade during last week, but market conditions weren't so good. I closed it to BE