GBPJPY continues to hold above the fourteen-month trend line that extends off of the October 2014 low. But the big question remains…
How much longer can the pair tread water?
Of course that’s an impossible question to answer. Luckily for us, we don’t need to answer it in order to take advantage of an eventual breakdown. So while the timing of it all will remain somewhat of a mystery, the idea that momentum is stalling isn’t quite so mystifying.
A quick glance at the weekly chart shows the pair carving out what appears to be a lower high following the multi-year high at 195.85.
If that weren’t enough, the weekly bearish pin bar shown in the chart above certainly doesn’t help any counterargument from the bullish camp.
It hints at quite the opposite, in fact.
A case could be made that the price action since November of last year is reminiscent of a rising head and shoulders pattern. However, whether or not it plays out as such is somewhat insignificant, at least at the moment.
What is more important right now is the trend line that extends off of the October 2014 low. A daily close below this level could trigger the kind of selling pressure needed to see a retest of the 2015 low at 175.
That said, there are a couple support levels that need to be dealt with before an 870 pip move can be realized. One such level is the 180.60 handle, which is the low for both September and October.
All in all, this trade idea still requires a good bit of patience to materialize. But don’t underestimate it. What it lacks in conviction is more than made up for by the profit potential, which is enough to keep it at the top of my watch list.