GBPJPY sellers are continuing their efforts to push the pair lower today. Last Friday I commented on the 1,200 pip wedge pattern that developed after coming off the December 2016 high at 148.44. Just hours after that commentary was released, the yen cross tumbled below key support.
The next level of interest is 138.90. This area is the September 2016 high and has also served as a key pivot in recent months. Yesterday’s bounce from 139.00 was no coincidence.
From here it’s going to take a daily close below the 138.90/139.00 area to secure the next downside target at 136.45. This level is the bottom of the 1,200 pip wedge and is also the current 2017 low.
The longer-term measured objective for this wedge pattern comes in at 128.60. It’s 1,200 pips (the height of the structure) below last Friday’s breakout point. It also happens to be very close the July and August 2016 lows.
In the world of Trumponomics, the markets seem to be obsessing over President Trump’s upcoming speech at 9 pm EST. And with market participants hanging on his every word, I suspect volatility will increase during and after the event, particularly in a risk-sensitive pair like the GBPJPY.
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I’d be very wary of shorting this breakout as this structure could also be a bullish flag/pennant which is more noticeable when viewed on W1 TF.
A daily close below 138.90 is a must here to lend credence to a bearish bias.