2025/08/06 GBP/JPY Trade Strategy

Today's GBP/JPY call: Buy.

The 1-hour chart is a buy and the 4-hour chart is a sell. Both buyers and sellers are active in the current range between the red lines, so I want to stick strictly to selling from the top and buying from the bottom.

Scenario A
I see the range high at 196.5.
If price breaks above it, I’ll switch to a bullish bias.
I’m aiming for a rise off the 4-hour double bottom, with a target of 197.5

Scenario B
I expect the range low around 195.9.
By the time price drops to the range low, the lower timeframes will be in a downtrend.
Rather than meeting a falling chart head-on at the low, I’ll buy once the momentum fades.
Target is 196.5

Scenario C
Selling the rally after a break below the range.
Ideally, I think the best setup is a retracement after price also breaks below the lower pink line at 195.7.
I picture this as a continuation of the decline from the 4-hour double top, but the near-term target is 195

Review

No trade.

A spot like circle ① is one where it’s fine to enter as the B scenario.
Price is forming a double bottom against the recent low, and this is the moment the 5-minute chart (M5) started turning up (making higher lows).
However, the market context isn’t good this time, so I passed on it.
If the 4-hour chart (H4) were also aligned to the buy side, I’d want to get in.

After that comes circle ②, the pullback after the break above, and this one is a bit tricky.
Price had already made a new high once, and this is where the subsequent pullback low forms, so in theory it’s a spot you’d want to buy.
But the turnaround is a little too fast.
If you were going to buy here, it would be a short-term countertrend trade based on risk-reward alone.