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Important: This site uses New York Close Forex Charts so that each 24-hour session starts and ends at 5 pm EST. These charts are essential for trading price action.
Last Friday I discussed a potential 500-pip opportunity on GBPJPY.
The wedge that began earlier this year spans 500 pips from top to bottom.
As such, any break from the pattern could traverse a similar distance.
Friday’s session closed above wedge resistance near 145.80. However, Monday’s gap down and subsequent close below the level erased any hope for buyers.
There was no opportunity to buy here, though.
That Friday surge never produced a retest of former wedge resistance as new support.
Furthermore, entering ahead of the weekend is always a bit risky.
So if you took a loss on the false move, it means you weren’t patient enough. At least that’s my interpretation of the situation.
But Friday’s false break could be a good thing for those who remained patient and open-minded.
In many cases, fake breakouts like Friday’s trigger an aggressive and lasting move in the opposite direction.
The GBPJPY is also at risk of closing today below wedge support at 143.80.
If it does close below this level at 5 pm EST, the pair will likely encounter an influx of selling pressure on any retest of the 143.80 area.
And if sellers can get behind today’s (potential) breakdown, we could see GBPJPY trend lower toward the 139.00 handle.
That said, don’t forget about the region just above 141.00.
You can see how 141.15 or thereabouts has supported GBPJPY since December 10th of last year.
At this point, it may be best to wait for a daily close (New York 5 pm EST) below 143.80 before considering an entry.
And even then, I’d wait for a retest of 143.80 as new resistance.
With the 10 and 20 daily EMAs 150 pips above today’s price, there’s a decent chance we’ll see a retracement of some sort before the next leg lower.
Justin Bennett is an internationally recognized Forex trader with 10+ years of experience. He's been interviewed by Stocks & Commodities Magazine as a featured trader for the month and is mentioned weekly by Forex Factory next to publications from CNN and Bloomberg. Justin created Daily Price Action in 2014 and has since grown the monthly readership to over 100,000 Forex traders and has personally mentored more than 3,000 students.Read more...
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