The 4 hour chart looks to me like something with potential to develop into a sell set up for swing traders

4 Hour Chart

The fact that price stopped and then fell away from the previous peak, makes this situation  look like a possible chart pattern set up.

It's early days yet but my preference would be to look at this as a possible sell set up given

  • The possibility that price has completed a 5 swing rally and
  • The fact that indicators on longer term charts are overbought (e.g. the stochastic on the daily and weekly charts)

GBPJPY CFD - 4 Hour. Source: CMC Tracker GBPJPY CFD - 4 Hour. Source: CMC Tracker

The simplest alternative at this stage would be a rectangle type situation where price falls away from here and breaks below the support.

Other possibilities are that price drifts up and down in the current range and ends up forming a different type of pattern e.g. an ascending triangle or perhaps a triple top.

Strategy

How a trader handles this situation might depend on what sort of pattern ends up developing. A triangle with an upward sloping support line for example, might provide an earlier break out level. A triple top might give a chance to sell around the rectangle resistance if price tests that level again.

The strategy on the chart would be one approach to the simple rectangle break out. This assumes

  • Stop entry sell on a break below the pattern support
  • Profit objective based on the 61.8% retracement and a projection of the rectangle height from the support level (shown on the chart as 100% using the Fib extension tool)
  • An initial stop loss behind resistance back in the body of the triangle with a plan to start trailing the stop lower once a downtrend gets well under way.