This week in our War Room weekly commentary video we talked about a bearish price action setup that formed on the GBPJPY daily chart. The situation was a bearish rejection candle had formed when the market tested a resistance level during Friday’s price movements last week.
This resistance level was actually the top of the larger scale that the GBPJPY has been trapped in the last few months. This level had been test many times before and prompted a bearish response from the market.
The market actually tried to break out above the range top and produced a short bullish rally into higher prices, however this move was short lived and the bulls could not maintain buoyancy. The rally collapsed back in on itself and the daily candle closed back under the range barrier. The upper tail on the candle is the evidence of this ‘failed breakout’. This fake out actually built strength into our bearish bias because it demonstrated that the bulls didn’t have what it took to move the market higher.
So tying all this together we were expecting the range to maintain its form and we could start to anticipate lower prices.
What happened next…
Previously we mentioned the GBPJPY bearish rejection price action setup that was discussed in the war room commentary video.
The market has since seen a monster sell off and just sliced into lower prices like a hot knife through butter. The bearish rejection candle was the framework that we used to anticipate future bearish activity but it’s always nice when you can grab 300 pips in 2 days. Most traders would struggle to capture that kind of movement in a month.
This market is still in bearish play and we are watching for a test of the range support where most war room traders are looking to exit.
This is a great example of how working with price action can get you into these powerful breakouts before they happen. Most indicators wouldn’t have responded to this move until half of it was over.
If you would like to learn how to anticipate price movements and catch explosive breakouts like this one, and you are keen to learn how to trade with price action. Then check out the Price Action War Room members only area, we are alwaysdiscussing price action setups similar to this one and have built up a very busy Forex price action trading community. We hope to see you on the other side.