This pair has been consolidating its massive downmove from 250 to below 120 over the last almost 2 years and the liklihood is that this period of consolidation will soon break and we get either a resumption of the downtrend or a sharp reaction higher. I’m betting on the latter. I like the way USD/JPY is trying to form a base above 82.85 and I also like the way cable has traded in recent months, and 1.55 is the pivot I’ve been watching. As both these levels are now close, this opens up possibilities for a major cross move. In GBP/JPY, the recent 126.30/134.20 upmove off a multi-month low has retraced exactly 61.8% to last nights low at 129.30. This is a first bullish sign. If we can get above the long-term bearish trendline at 135 then I really will start to feel confident.
If USD/JPY breaks below 82.50 and if cable establishes itself below 1.55 then I am probably wrong with this trade but until that happens I’ll have my contrarian hat firmly on and will start building a long position.
