The GBPJPY is once again trading above the rising wedge top we discussed last week. I first mentioned it on Tuesday and then again on Friday when buyers looked to be in trouble.
As I pointed out over the weekend, Friday’s 153.40 close put the yen cross well below the wedge top near 153.80. That meant the area should begin to serve as new resistance.
If so, what’s going on with today’s price action?
At the moment, the GBPJPY is trading well above the 154.00 handle. In fact, it’s closer to 155.00 than it is to 154.00.
Many traders would look at this and claim that the pair has broken back above 153.80/90 and is once again bullish. While that may very well be the case, it isn’t how I approach the markets.
For me, everything comes down to the daily close at 5 pm EST. This is why I vouch for New York close charts that provide five 24-hour periods.
As for the GBPJPY, today’s close will likely be a significant one. If the pair closes the day back above 153.80/90, it’s a sign that the multi-year rally is still intact. It would also nullify the wedge top to some degree.
Now, if sellers can force a close back below 153.80, it would suggest that Friday’s false break is intact. It would leave the GBPJPY rally vulnerable, and all eyes would turn to wedge support near between 151.50 and 152.00.
I’m not saying that’s what will happen. What I am saying is that nothing is confirmed one way or the other until today’s session closes at 5 pm EST.
There’s no doubt sellers have their work cut out for them. As I type this the pair has surged above last week’s high and buyers are clearly back in the driver’s seat. But the answer I’m searching for won’t materialize for another six hours.
Be aware that the BOJ is on tap during Tuesday’s session, so it may be prudent to wait for the event to pass before further consideration here.