GBP/JPY 1H - Bearish Setup Awaiting Liquidity ClearanceIn this GBP/JPY 1-hour chart, we are preparing for a potential bearish trade setup based on liquidity principles from ICT (Inner Circle Trader) concepts. Here's a breakdown of the key elements:
Market Structure and Bias
The chart shows a clear bearish bias, as noted by the significant down move, but no short positions should be taken until the Buy-Side Liquidity (BS) above is cleared. This liquidity is within the premium zone of the recent range, and smart money may push prices higher to fill orders and grab liquidity before resuming the bearish trend.
Liquidity Targets
The Buy-Side Liquidity (BSL) is highlighted above the current price, showing that there are likely stop-loss orders and pending orders above this level. Price is expected to gravitate towards this liquidity before any significant downward movement.
Additionally, during the Asian session, we see a liquidity grab, which could indicate that the market makers have engineered a move to take out weaker hands before continuing higher into the premium zone.
Optimal Trade Entry (OTE)
The Fibonacci retracement tool has been applied to the recent swing high to swing low. The 61.8% - 70.5% retracement levels coincide with a Bearish Order Block, offering a potential area for the market to reverse lower. This area of confluence adds to the potential for a high-probability short setup once the BSL is cleared.
Change of Character (CHOCH)
A Change of Character (CHOCH) is present, showing that the market has already given an early indication of a potential reversal to the upside. This CHOCH supports the idea that the price may need to grab buy-side liquidity above before continuing the bearish trend.
Bearish Continuation Setup
Once the buy-side liquidity is taken and price enters into the premium zone (61.8% - 70.5% Fibonacci retracement), we expect a bearish continuation. This aligns with the overall market structure and liquidity principles.
Execution Plan
Entry: Wait for price to clear the buy-side liquidity and enter the premium zone (61.8% - 70.5% Fibonacci retracement) before considering short positions.
Stop Loss: Place stops above the 78.6% Fibonacci level, protecting against a deeper liquidity grab.
Take Profit: Target the sell-side liquidity below, with the potential for extended targets lower if the bearish trend continues.
