The GBPJPY sold-off from its resistance area which is visible in light grey in the above H4 chart until its was able to put an end to it once it reached its support area marked in light blue. The Bollinger Band indicator, which supported the sell-off, now indicates an end to the move as the lower band is sloping to the upside as it remains inside of its support area. The middle band as well as the lower band are sloping to the downside.
Price action is currently trading between the middle band and the lower band as it was able to move above its support area. This may prompt forex traders to realize floating trading profits by closing short positions which will lead to a short-covering rally in this currency pair. The GBPJPY possesses attractive upside potential with minimal downside risk and a breakout above the middle band of the Bollinger Band indicator will further strengthen a move to the upside.
Forex traders are recommended to enter long positions at 183.100 and below this level in order to take advantage from the expected short-covering rally. Conservative forex traders should wait for a breakout above the middle band of it Bollinger Band indicator before entering their long positions. A take profit target of 188.750 has been set for a potential trading profit of 565 pips on the H4 Chart. More buy orders are expected after the GBPJPY completes its breakout above the middle Bollinger Band.
Forex traders should protect this trade with a stop loss level at 182.000 for a potential trading loss of 110 pips which will result in a Risk-Reward (RR) ratio of 5.14.
Long @ 183.100
TP @ 188.750
SL @ 182.000