GBPJPY Slumps As RSI Indicates That The Market Is Overpriced

GBPJPY Analysis: Price Slumps As RSI Indicates That The Market Is Overpriced

GBPJPY slumps as the RSI indicates that the market is overpriced. The market had been in an uptrend since the beginning of the year. The price began from the 155.350 support and continued rallying as it broke major resistance levels. Nevertheless, the Relative Strength Index has suggested the possibility of a reversal as the price reached an overbought region.

GBPJPY Significant Zones
Demand Zones: 155.350, 148.630
Supply Zones: 169.000, 172.130

The price of the British pound was down for a long time last year. However, it picked up in subsequent weeks due to the selling pressure at the discount zone. There was an overly sold market in the last week of October 2022, as the bears were in control. GBPJPY dived deeply downward to hit 148.630 but eventually closed for the day at 154.710. Following the extreme decline into the discount zone, an upward trend began. Thanks to the Elliott Impulse Wave (12345), GBPJPY left the discount zone at the 169.000 psychological level.

Owing to the number of sell orders placed at the psychological level of 169.000, GBPJPY experienced another massive crash. However, the crash did not occur until after the formation of a triple top finished in December. During the emerging downtrend, a bearish order block formed. But the order block failed to create a lower low in March 2023 since the market’s structure is now bullish.

Market Expectation

GBPJPY is heading into a bullish order block on the four-hour chart. The bullish order block will likely cause a short-term rally as it aligns with the daily timeframe bias. Owing to the indication of the RSI, the market might be bearish for a significant period.