Strapped for time, so I will make this quick. There have been some developments in the Yen pair, notably the uptick in volatility. That is of interest to me for many reasons, but for the purpose of this blog, it is due to the trade in the GBP-JPY discussed on these pages.
I entered into a short position here at 170.90, which turned out to be a little premature. The price went through a rebound, but eventually moved down with some authority. I was targeting the 168 handle but the selloff stalled before getting there. Following a doji and a hammer, potential reversal development, the GBP-JPY started to climb, forcing me to close the trade. In the end, it was a gain of 184 pips.
Indeed, there was a strong run-up in price, pushing almost to the 100 SMA on the 4H chart. If this pair has turned the corner from the longer-term perspective, current location might be a very good area to go short. So far, it looks like a typical bounce to the 100 SMA, but in order to increase probability of success, I would like to see a strong bearish reversal candlestick pattern on this chart. There is no guarantee it will happen, but if it does, I want to sell the GBP-JPY again and try to catch a decline back to 168.00 or so.