GBPJPY Direction Remains Upward As RSI Approaches Overbought Region

GBPJPY Analysis: Direction Remains Upward as RSI Approaches Overbought Region

GBPJPY direction remains upward as the RSI approaches an overbought region. The market has been ranging between the 169.000 and 155.350 price levels since November 5, 2022. According to the Relative Strength Index (RSI), the market is close to being overbought as it approaches the 169.000 level.

GBPJPY Significant Zones

Demand Zones: 155.350, 148.630

Supply Zones: 169.000, 172.130

Before the convergence of price into the trading range, which lies between the 169.000 and 155.350 price levels, GBPJPY was bullish. The Great British Pound rose adversely against the Japanese Yen from the 148.630 demand level. Before this notable rally, the market was in a neutral state. However, a price decline was engineered to sweep sell-side liquidity into the 148.630 demand level before the notable rally. According to the RSI indicator, the price sank first into an oversold region before getting propelled upward.

In September 2022, the GBPJPY rose with increasing momentum as it created a fair value gap around the 158.000 price level. The rally continued while taking out the GBPJPY sellers as their stops got hit. The RSI indicator shows that the market has not been in an overbought state for a very long time. This indicates that the market is not dominated by the bulls. However, following the market structure shift (MSS) in January 2023, GBPJPY has been bullish as the RSI approaches overbought territory. The MSS occurred as a result of the price’s reaction toward the FVG at the discount of the previous trading range.

Market Expectation

Similarly, on the four-hour chart, the market structure has been bullish due to the price’s reaction at the FVG. Currently, the RSI indicates an overbought signal. This might lead to a downward correction before the upward move continues.

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