GBPJPY broke below a critical support level on Wednesday.
Shortly after the Fed rate decision and statement at 2 pm EST, the GBPJPY closed the day below wedge support at 5 pm EST.
Sellers followed through on Thursday pushing the pair lower by nearly 200 pips.
However, there were a few bids toward the end of Thursday’s session to help ease the pressure.
Those bids were likely the result of the 144.60 horizontal level.
You can see how it has served as a pivot for GBPJPY since the late January high.
You’ll also notice how the March 11th candle pierced wedge support. But the key here is where GBPJPY closed the day.
Remember that I use New York close charts so that each 24-hour session closes at 5 pm EST. That gives me five 24-hour candles each week.
So even though the March 11th candle pierced support, it didn’t close below it thus the level remained intact.
Wednesday’s break below wedge support and Thursday’s bounce from 144.60 leaves the GBPJPY in limbo going into next week.
That said, my bias is weighted to the downside given this week’s breakdown.
If you want to be conservative, waiting for a daily close below the 144.60 level isn’t a bad idea.
It may also be helpful to keep an eye on the USDJPY.
I wrote about the USDJPY broadening wedge yesterday, and so far today, sellers are carving fresh lows for the week.
USDJPY can be an excellent barometer for the yen crosses including GBPJPY.
It isn’t a one-to-one relationship, but it can offer clues about the future direction of the Japanese yen.
I’m seeing similar patterns develop on other yen crosses such as EURJPY and even AUDJPY and NZDJPY.
We also know how the CADJPY has faired following the March 1st sell signal.
As long as this theme continues and GBPJPY remains below former rising wedge support near 147.00, I will maintain my bearish outlook.
Key support for the week ahead comes in at 144.60 followed by 141.15.