Analysis of GBP/JPY on 1H Time Frame
Overview
This chart represents the GBP/JPY pair on a 1-hour (1H) time frame with a complex overlay of technical analysis frameworks, most notably a combination of Wyckoff Distribution and Elliott Wave Theory. The chart is densely marked with key points that suggest the presence of a distribution phase, with an expected price decline over the next two weeks based on the patterns identified.
Key Terminology & Concepts
Wyckoff Distribution: A phase where a market transitions from an uptrend to a downtrend. The market undergoes multiple stages: Preliminary Supply (PSY), Automatic Rally (AR), Secondary Test (ST), Upthrust (UT), and Sign of Weakness (SOW).
Elliott Wave: A technical analysis theory that interprets market movements in a series of 5-wave impulsive patterns and 3-wave corrective patterns.
SOW (Sign of Weakness): A point in the Wyckoff Distribution where downward pressure becomes more pronounced, signaling a potential bearish continuation.
Upthrust (UT): A momentary breach of resistance, typically a false breakout, signaling the final stages of distribution.
Phase B: Part of the Wyckoff method where the asset shows sideways movement before entering a significant downtrend.
Analysis Breakdown
Wyckoff Phases
Preliminary Supply (PSY):
The chart has identified PSY early on, where initial signs of selling pressure emerge in an upward trend.
Automatic Rally (AR):
Following PSY, the price rallies as buying pressure absorbs the selling, but it lacks strong momentum, hinting at distribution rather than accumulation.
Secondary Test (ST):
ST represents a testing phase where the price re-visits key support levels, confirming that the market is not ready for a breakout to new highs.
Upthrust (UT):
Marked towards the final leg of the uptrend, UT is a false breakout where the price temporarily breaches resistance, reaching a high around 193.57, signaling exhaustion of buyers.
Sign of Weakness in Phase B (SOW):
In Phase B, after the upthrust, the price shows signs of losing strength and begins to drift lower, suggesting the onset of distribution. The chart has marked this as "SOW in Phase B" indicating growing bearish momentum.
Elliott Wave Application
Wave Structure: The chart integrates Elliott Wave analysis alongside Wyckoff’s phases.
Wave (iii) marks the end of a strong upward impulse wave.
Wave iv indicates a corrective move, possibly forming the penultimate stage before a final bearish decline.
Wave v is expected to complete around the Upthrust (UT) region, marking the last wave in the upward cycle before the major downtrend begins.
Price Zones & Resistance/Support
Resistance Line - BC Distribution:
At 193.574, this acts as a strong resistance level that has been tested during the upthrust. The chart expects this level to hold and not break further.
Support Line - AR Distribution:
Around 192.168, this support line from the Automatic Rally (AR) is expected to be tested and possibly broken as distribution proceeds.
Future Price Expectations
Downside Expectation (Next 2 Weeks):
The Wyckoff Distribution suggests that after the Upthrust (UT), the price is likely to enter a significant downtrend. The chart projects a move into Wave i and Wave ii, part of a larger bearish Elliott wave structure.
The key target zone is below 192.000, where further price weakness is expected.
Weekly Close Expectation:
Based on the projections, the chart anticipates a bearish close around 30th September 2024, signifying a continuation of the selling pressure.
1W Close (weekly close) is marked near 190.000, indicating a significant decline in the pair over the next week.
Potential Bearish Continuation:
The longer-term outlook reflects the completion of a distribution phase, followed by continued downward pressure, possibly testing lower levels around 189.000 in Phase A of the distribution process.
Conclusion
The technical analysis on the GBP/JPY pair suggests the pair is currently completing a distribution phase under the Wyckoff Method, with key bearish signals forming. After reaching a high near 193.57, the price has shown an Upthrust (UT), signaling exhaustion and a likely reversal. Coupled with Elliott Wave Theory, the pair is projected to enter a corrective Wave v, followed by a larger downtrend that could test levels below 192.000 over the next two weeks.
The 1W close is expected to confirm this bearish sentiment with a significant decline by 30th September 2024. As such, traders should prepare for a potential short-selling opportunity, with key levels of support to monitor around 190.000 and 189.000.
This chart represents the GBP/JPY pair on a 1-hour (1H) time frame with a complex overlay of technical analysis frameworks, most notably a combination of Wyckoff Distribution and Elliott Wave Theory. The chart is densely marked with key points that suggest the presence of a distribution phase, with an expected price decline over the next two weeks based on the patterns identified.
Key Terminology & Concepts
Wyckoff Distribution: A phase where a market transitions from an uptrend to a downtrend. The market undergoes multiple stages: Preliminary Supply (PSY), Automatic Rally (AR), Secondary Test (ST), Upthrust (UT), and Sign of Weakness (SOW).
Elliott Wave: A technical analysis theory that interprets market movements in a series of 5-wave impulsive patterns and 3-wave corrective patterns.
SOW (Sign of Weakness): A point in the Wyckoff Distribution where downward pressure becomes more pronounced, signaling a potential bearish continuation.
Upthrust (UT): A momentary breach of resistance, typically a false breakout, signaling the final stages of distribution.
Phase B: Part of the Wyckoff method where the asset shows sideways movement before entering a significant downtrend.
Analysis Breakdown
Wyckoff Phases
Preliminary Supply (PSY):
The chart has identified PSY early on, where initial signs of selling pressure emerge in an upward trend.
Automatic Rally (AR):
Following PSY, the price rallies as buying pressure absorbs the selling, but it lacks strong momentum, hinting at distribution rather than accumulation.
Secondary Test (ST):
ST represents a testing phase where the price re-visits key support levels, confirming that the market is not ready for a breakout to new highs.
Upthrust (UT):
Marked towards the final leg of the uptrend, UT is a false breakout where the price temporarily breaches resistance, reaching a high around 193.57, signaling exhaustion of buyers.
Sign of Weakness in Phase B (SOW):
In Phase B, after the upthrust, the price shows signs of losing strength and begins to drift lower, suggesting the onset of distribution. The chart has marked this as "SOW in Phase B" indicating growing bearish momentum.
Elliott Wave Application
Wave Structure: The chart integrates Elliott Wave analysis alongside Wyckoff’s phases.
Wave (iii) marks the end of a strong upward impulse wave.
Wave iv indicates a corrective move, possibly forming the penultimate stage before a final bearish decline.
Wave v is expected to complete around the Upthrust (UT) region, marking the last wave in the upward cycle before the major downtrend begins.
Price Zones & Resistance/Support
Resistance Line - BC Distribution:
At 193.574, this acts as a strong resistance level that has been tested during the upthrust. The chart expects this level to hold and not break further.
Support Line - AR Distribution:
Around 192.168, this support line from the Automatic Rally (AR) is expected to be tested and possibly broken as distribution proceeds.
Future Price Expectations
Downside Expectation (Next 2 Weeks):
The Wyckoff Distribution suggests that after the Upthrust (UT), the price is likely to enter a significant downtrend. The chart projects a move into Wave i and Wave ii, part of a larger bearish Elliott wave structure.
The key target zone is below 192.000, where further price weakness is expected.
Weekly Close Expectation:
Based on the projections, the chart anticipates a bearish close around 30th September 2024, signifying a continuation of the selling pressure.
1W Close (weekly close) is marked near 190.000, indicating a significant decline in the pair over the next week.
Potential Bearish Continuation:
The longer-term outlook reflects the completion of a distribution phase, followed by continued downward pressure, possibly testing lower levels around 189.000 in Phase A of the distribution process.
Conclusion
The technical analysis on the GBP/JPY pair suggests the pair is currently completing a distribution phase under the Wyckoff Method, with key bearish signals forming. After reaching a high near 193.57, the price has shown an Upthrust (UT), signaling exhaustion and a likely reversal. Coupled with Elliott Wave Theory, the pair is projected to enter a corrective Wave v, followed by a larger downtrend that could test levels below 192.000 over the next two weeks.
The 1W close is expected to confirm this bearish sentiment with a significant decline by 30th September 2024. As such, traders should prepare for a potential short-selling opportunity, with key levels of support to monitor around 190.000 and 189.000.
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