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I’m still kicking myself for chickening out on the short-term Guppy pullback play, but this longer-term reversal setup could still be worth catching.

Short GBP/JPY Idea

You see, I had been planning on catching this neat downtrend correction on the pair, which was basically the right shoulder of this reversal formation. I really should’ve hopped in when the U.K. CPI disappointed. Argh!

Anyway, I did mention in my quarterly trade reviews that I’d be focusing more on longer-term setups since those tend to work out better for me. So here’s the head and shoulders breakdown I’m waiting for:

GBP/JPY Daily Forex Chart
GBP/JPY Daily Forex Chart

Look familiar? I’ve had my one good eye on this pattern a couple of weeks back!

This time, though, fundamentals line up better for a neckline break as the U.K. is being haunted by Brexit issues once more. Economic data is starting to show signs of caving to the looming uncertainty, likely dampening BOE rate hike hopes from here.

Meanwhile, the yen could continue to stay supported by safe-haven demand, especially since trade war fears aren’t completely out of the picture just yet.

Weaker tightening expectations shared by the Fed in the May FOMC minutes might also render the yen as the preferred safe-haven currency while U.S. bond yields retreat.

With that, I’ll be on the lookout for a move below the 146.00 to 146.50 levels as reversal confirmation. The chart pattern is approximately a thousand pips tall, after all, so I could aim for a target that’s almost the same height. I’ll set my stop just past the latest bounce to the 150.00 handle.

U.K. retail sales and a speech by BOE Guv’nah Carney are still on today’s docket, so I’m counting on some volatility later on. I’ll keep y’all posted!