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And I’m in! Guppy broke below the double top neckline and triggered my short entry order at the start of this week. Wish me luck!

Short GBP/JPY Idea

I had been hoping to catch a test of the longer-term ascending triangle resistance on this pair but settled for a short entry on a break of the short-term reversal pattern’s neckline instead. After all, last week’s U.K. economic reports have been hinting that the BOE might have second thoughts about tightening, especially since Brexit concerns are resurfacing.

But since the pair was already hitting its full WATR then, I opted to set my entry orders at the start of this week instead. Pound bears seemed eager to get back in the game on Monday, so my short order at 144.25 was triggered.

GBP/JPY 1-hour Forex Chart
GBP/JPY 1-hour Forex Chart

Even though there haven’t been any major reports released from the U.K. yet, the downbeat sentiment in the European region after seeing mostly weaker than expected euro zone PMI figures also weighed on sterling. Apart from that, the Japanese yen drew some support from risk-off traders seeking to reduce their USD exposure before the FOMC statement.

The yen could stay supported until the actual Fed decision if traders keep pricing in expectations of a less hawkish tone. In addition, political troubles in Washington and crushed hopes of tax reform this year could also drag U.S. bond yields down – something that is usually positive for the lower-yielding Japanese currency.

For today, BOE MPC member Haldane has a speech lined up and his remarks could spur additional volatility for pound pairs. He’s usually a dovish fella so emphasizing the risks facing the U.K. economy could push the currency lower.

As for Japan, the next data dump won’t be due until Friday so the FOMC decision could be the main event risk for the yen. Here’s what I’ve got:

Short GBP/JPY at 144.25, stop loss at 147.25, profit target at 141.25. I’ve risked 0.5% of my account for this simple 1:1 setup.

Care to share your thoughts on my latest trade idea?

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