Pound has rallied throughout November versus yen

One of the best trades this month has been buying GBP/JPY. It's only declined on three days since November 3. The cumulative gain is nearly 1500 pips.

Unfortunately for the bulls, the biggest decline this month is today as the pair sinks 186 pips. In a flip from this month's trend, the yen is the strongest performer today and pound the weakest. That fits in the broader market theme of a retracement today.

How meaningful is the turn? Not much, at least not yet. In the scope of the huge rally this is still a blip.

Two things are worrisome:

1) The shape of the turnaround

The gain on Thursday, doji on Friday and bearish engulfing reversal today is a negative pattern and a potential topping pattern. The caveat is that that Thurs/Fri trading was thinned by a US holiday so it's dangerous to read anything into those days. If you just pretended they didn't happen, today would be a plain-Jane 50 pip retracement from Wednesday's close.

2) The top came ahead of the July high

The other negative signal is that there is a potential top forming ahead of the July 15 high of 143.24. That's the post-Brexit top so it's a critical level on the chart and in the minds of fundamental traders.

What's next

In the short term, I'm watching the Nov 21 high of 138.84, which is another 50 pips below spot. A break below that signals the risk of a deeper retracement.