The GBP/JPY was unable to breakout above its resistance area, marked in light grey in the above H4 chart, and is now exposed to a sell-off. The Bollinger Band® indicator supports the strong rally, which started from its support area visible in light blue.
The upper band reached the resistance area and the middle band as well as lower band are moving higher; the lower band is starting to lose its strength. This currency pair is trading between the middle band and the upper band of the Bollinger Band Indicator.
Price action is expected to enter a strong sell-off as forex traders are likely to realize floating trading profits following the failed breakout. A breakdown below the middle band of the Bollinger Band indicator will exercise more selling pressure on this currency pair, which is expected to reach its support area. The upper band as well as middle band are also expected to lose its strength, which would add to the sell-off. Forex traders are advised to enter short positions at 185.800 and above in order to be well position for the expected profit taking sell-off in this currency pair and a break in the up-trend.
Conservative forex traders should wait for price action to break down below the middle band of its Bollinger Band Indicator, which will increase selling pressure. A take profit target of 180.800 has been selected for a potential trading profit of 500 pips.
Forex traders should protect this trade with a stop loss level at 187.00 for a potential trading loss of 120 pips, which will result in a Risk-Reward (RR) ratio of 4.17. GBP/JPY Short at 185.800 TP at 180.800 SL at 187.000 RR: 4.17