GBP/JPY finally broke below an intermediate term wedge pattern formed from Dec 30. See Figure 1 for the daily chart. I am noticeably late in this GBP/JPY short entry because I was preoccupied with other positions (e.g. my EUR/CHF and GBPCHF shorts) today. In any case, this is an intermediate term (a few days at least) play so there is no rush. My first short was executed at 146.51 on obvious signs of short term pound weakness versus the GBP/CHF pairs. GBP/JPY made some retracement on a test of 146.00 but GBP/CHF kept on dropping, so I took a short position once it touched the 146.50 resistance. My average price in this is 146.32. I have set my stop loss to lock in some profits already (which might get taken out soon). Note that I just happened to be watching the GBP/CHF currency pair as I have a position on shorting that too. Otherwise EUR/GBP and GBP/USD would have been better for short-term intermarket analysis because of higher liquidity. With regard to this formation, as you can see on Figure 1, today's break of 147.50 gave way, all the way, down to 143.00. This target price is estimated from the height of the wedge pattern which it just broke through. The distance from 147.50 to 143.00 is about the distance of the height of the wedge (Dec 29th low to 30th high). Another reason for targeting this 143.00 price is because of my weekly chart of Figure 2. 142.50-143.00 is the next support according to a long term trendline (lowest ascending white line) as shown in Figure 2. GBP/JPY haven't seen these prices for a good month, so hopefully the move down shouldn't be too difficult. As usual, I will stockpile my short position in this gradually to limit risk.
[caption id="" align="aligncenter" width="580" caption="GBP/JPY, daily chart"][/caption]
[caption id="" align="aligncenter" width="580" caption="GBP/JPY, weekly chart"]1[/caption]