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Yesterday we looked at how the NZDJPY could reverse lower with a close below ascending channel support. At the time the pair was trading at 80.71. It seems sellers are now holding prices below former support on a 4-hour closing basis.
I also have reason to believe that the EURJPY has topped out. I mentioned this last week and have also written several posts on the topic in the member’s area.
Is the GBPJPY next?
One thing I’ve noticed over the years is that the yen pairs tend to exhibit domino theory. In other words, a breakout on one or two yen pairs can sometimes foreshadow what’s about to happen with others. That’s particularly true at turning points.
The USDJPY was first. We discussed a wedge pattern last week that triggered a favorable short opportunity which delivered more than 100 pips in just seven hours.
So far it seems the NZDJPY is second. As long as that 80.50/60 area holds as resistance, sellers have a fighting chance at regaining control.
So how about the GBPJPY?
Since the August 2017 low, the pair has carved a wedge pattern. The formation has a slight upward tilt and has three touches on both support and resistance.
It was wedge support that helped trigger last week’s bounce at 150.40. However, if the other yen pairs are any indication, I would suspect that sellers will force yet another retest of support momentarily.
With patterns like this, it’s usually best to let the market make the first move. Until the GBPJPY closes the day (New York 5 pm EST) below support or above resistance, we don’t have enough information to form a directional bias.
A daily close below wedge support would likely encounter buying pressure at 149.35 followed by 147.00 and 144.00. Alternatively, a close above wedge resistance would likely find selling pressure at the 156.00 handle.
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