The first thing I do when analyzing the currency pairs I trade is to look at the monthly time frame over the last 3 to 4 years.
In the chart I see price action is moving between major horizontal support to major horizontal resistance. It is normal for price action to move between support and resistance and back again when a market is in a long term trading range. Price action will continue to move from support and resistance until price breaks out indicating a change in trading psychology .
The chart shows price having bounced off major support and is now headed upward to test Major Resistance. The latest candle has formed a long upper candle wick. Normally when a candle forms a long wick at a support and resistance line I look at it as a reversal candle. When a candle with a tall upper wick forms somewhere between major support and major resistance I look at the candle as telling me the market has moved too far too fast and has corrected back downward to relieve the oversold condition. As soon as price action has completed its corrective exercise it should once again move upward in an effort to test major resistance. Note the other similar situation in 2016 as shown on the chart with a red oval. There are two other possible outcomes for price action but are less likely to occur and are outlined below.
There is always another price action that could occur but is less likely. The latest candle could be signaling a reversal back downward to retest major support before heading upward to major resistance. This does happen but is less likely to occur than the continuation upward to test major resistance. Normally when price action is ready to start a new downward trend price will move down from major resistance to major support, move sideways along major support for awhile and then breakout below major support and start heading lower.
There is also a third less likely possibility for price action. Price action could turn down now, break out below major support and start a new downward trend.
The next thing I do in my analysis is to move to the daily or 4 hour time frame to look for trade setups.
Note: GBPJPY is one of the 10 most volatile currency pairs. I am very interested in analyzing these 10 pairs for entry opportunities as they can provide the best money making opportunities.
In the chart I see price action is moving between major horizontal support to major horizontal resistance. It is normal for price action to move between support and resistance and back again when a market is in a long term trading range. Price action will continue to move from support and resistance until price breaks out indicating a change in trading psychology .
The chart shows price having bounced off major support and is now headed upward to test Major Resistance. The latest candle has formed a long upper candle wick. Normally when a candle forms a long wick at a support and resistance line I look at it as a reversal candle. When a candle with a tall upper wick forms somewhere between major support and major resistance I look at the candle as telling me the market has moved too far too fast and has corrected back downward to relieve the oversold condition. As soon as price action has completed its corrective exercise it should once again move upward in an effort to test major resistance. Note the other similar situation in 2016 as shown on the chart with a red oval. There are two other possible outcomes for price action but are less likely to occur and are outlined below.
There is always another price action that could occur but is less likely. The latest candle could be signaling a reversal back downward to retest major support before heading upward to major resistance. This does happen but is less likely to occur than the continuation upward to test major resistance. Normally when price action is ready to start a new downward trend price will move down from major resistance to major support, move sideways along major support for awhile and then breakout below major support and start heading lower.
There is also a third less likely possibility for price action. Price action could turn down now, break out below major support and start a new downward trend.
The next thing I do in my analysis is to move to the daily or 4 hour time frame to look for trade setups.
Note: GBPJPY is one of the 10 most volatile currency pairs. I am very interested in analyzing these 10 pairs for entry opportunities as they can provide the best money making opportunities.