The GBPJPY is approaching a confluence of support near the 143.00 handle. We discussed this area over the weekend as one that could attract buying pressure this week.
That support is part of one of the best looking multi-month wedge patterns I’ve seen in quite some time.
At the moment, the pair is trading just 60 pips above the 143.00 area and looks poised to retest it any day now. This comes as other yen crosses continue to show a weakness of their own, including the AUDJPY and NZDJPY.
That observation is enough to prevent me from buying the GBPJPY at 143.00. If the yen is gaining strength across the board, I don’t want to be a buyer here. The pound sterling also put in a bearish formation of its own last week against the US dollar.
If those two patterns prevail (yen strength and pound weakness), we could see this nine-month wedge breakdown within the next couple of weeks.
I’ll remain a spectator for now and will only consider selling the pair on a daily close (5 pm EST) below 142.80. It would take a well-formed bullish pin bar at 143.00 to challenge the bearish scenario, but even then I’m not sure I would be convinced.
A close below 142.80 would expose the next key level of support at 138.60. On the flip side, a move higher from the 143.00 area would first target wedge resistance at 147.50.
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