Since coming off the December 2016 high at 148.44, the GBPJPY has coiled itself into a 1,200 pip wedge pattern. And the longer the pair consolidates, the more aggressive the ensuing breakout is likely to be.
The pair is in the process of retesting wedge support for the third time since the January 2017 low at 136.44. Typically when the price action begins to lean on one side more than the other, it’s a sign of the direction the market favors.
But like all terminal patterns, it’s better to stand aside and let the market make the first move.
With this in mind, a close below support would expose the 138.90 handle. This area marks the September 2016 high and has also been a key pivot since November of last year. A close below that would open the door for a move toward the current 2017 low at 136.44.
Alternatively, a close above wedge support would expose the current February high at 142.80. A break above that and we could see the yen cross move to test the January high at 144.75.
The levels I just listed would be near-term targets. But as the title suggests, the measured move for a wedge pattern can be found using the height of the formation. When we do that, we get 154.30 and 128.60 for upside and downside (long-term) targets respectively.
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