"Anyone looking to sell a major currency against the Japanese yen must at least consider the British pound." For weeks, I've been delivering variations of that message to FX Bootcamp members attending my coaching sessions in our New York Training Room. During the 18-22 February trading week, a short position taken on the GBP/JPY currency pair paid handsomely.
Two sources of prospective resistance -- a downtrend resistance line based on a series of lower highs established over the previous two trading days, and the 38.2 percent Fibonacci retracement level of the price decline from Monday's high to Tuesday's low -- were positioned near the 144.70 level in the early part of the Wednesday 20 February Asian trading session. Traders who shorted the pound yen at or near 144.70 soon after the Tokyo open, were sitting on a roughly 60-pip profit some nine hours later.
The release of the latest Bank of England (BOE) Monetary Policy Committee (MPC) meeting minutes triggered a sterling sell-off which took the GBP/JPY price from 143 to 142 over a 30-minute time period. The pair's roughly 330-pip drop over a thirty-hour period ended at its weekly M1 pivot point near the end of Thursday's Asian session.
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