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As of Tuesday’s high, the GBPJPY had clawed back more than 1,000 pips since the March 18th low of 124.02.
However, it’s an uphill battle for the yen cross.
While the pound has been relatively strong in recent weeks, particularly against the US dollar, it’s fighting against a strengthening Japanese yen.
I even called out my USDJPY short entry at 111.50 in the member’s area when the pair was trading just above 111.20 on Wednesday.
That initial position is now 440 pips in profit in a matter of days.
Although I didn’t announce it, I also shorted the EURJPY last week when the pair was trading at 120.85.
I will be adding to that position following a close below the short-term channel which I’ll be sharing with DPA members later today.
The EURJPY hammer that developed last Thursday following a 340 pip rally hinted at a turn lower.
Of course, the 121.15 resistance area was a contributing factor to my decision.
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That position is 370 pips in profit as I write this.
You may be wondering what a weaker USDJPY and EURJPY have to do with the GBPJPY, especially when the pound has been stronger on a relative basis.
One thing to know about the yen pairs is that they tend to move in tandem.
If you start to see several yen pairs weaken, there’s a good chance the rest will follow.
That’s especially true for the USDJPY, which is the barometer for the yen and risk assets as a whole if history is any guide.
With that in mind, I’m only interested in selling the GBPJPY.
But timing is everything.
That’s why I told members last night that the GBPJPY had just broken below a short-term support level near 133.80.
Sellers have already driven the pair 100 pips lower so far today.
If the GBPJPY can get through this minor support area around 132.60, there isn’t much to prevent a move to 131.25.
That’s one of the support levels I mentioned in Saturday’s video.
A close below 131.25 would open the door to the 127.00 area and perhaps the year-to-date low at 124.00.
This idea is in play as long as GBPJPY trades below the 134.30 region.