2025/05/05 GBP/JPY Trade Strategy

The GBP/JPY trade strategy for 2025/05/05: sell

Right now the daily chart has a bullish bias, but it looks like it may be turning into a range.
The 4-hour chart is at a buying-the-dip point.
So the market context suggests price is likely to aim higher for now.

However, shifting to the 1-hour chart, it’s a sell.
So for day trading I’m going in with a bearish bias, but it’s important to understand this is a somewhat tricky spot in the market.

Scenario A
If price breaks above the line around 192.6, it’s a buy.
The idea is to aim for the recent high, with a target around 193.3.
However, there’s also a fair amount of room to run down to the lower line, so the market context may change along the way and the bias may have already switched to bullish at an early stage.

Scenario B
I see around 192.6 as the current range high, but as I wrote above, by the time price approaches this high, there’s a good chance the bias will already have made a bullish shift.
With the 1-hour chart in sell mode, to sell under Scenario B you need to wait for a short-term turning down (making lower highs).
Be careful not to end up countertrend trading.

Scenario C
If price breaks below around 191.5, I think selling momentum will pick up.
From there I’ll look to sell the retracements.
Target is around 190.7–190

Review

In the first half, up to around 5 pm JST (08:00 UTC), the price action was murky.
With a saucer bottom forming and the risk of a pullback on the 4-hour chart, it was hard to go short here.
For anyone who bought here, it was a bit early from a day-trading bias.

After that, on the retracement following the break below, you could sell from the red circle under Scenario C.
The risk-reward was good here too, so this was an opportunity you didn’t want to miss.
Then, once price reached the recent low, take profit without hesitation. 40 pips
With a US data release coming up at 11 pm JST (14:00 UTC), it was best to close the position before then.