Knowing the character of a currency pair is important and highlights extreme caution on our GBPJPY short.
* The sharp reversal from 133.45 encourages our view of medium term weakness.
* But Sterling likes to retest highs lows and consolidate tops before trends are sustained (just look at 117!)
* We are squaring shorts on weakness then in order to resell strength (and will probably time short term longs against longer term option puts).
* Euro Swiss may (perversely) remain a useful indicator.
We should be excited then by the reversal as a sign of medium term weakness...and we are...except for Sterling Yen's fondness of deep B waves within consolidation tops and bottoms.
We are reducing shorts then as it approaches the 127.30 38.2% retracement and the previous 126.70 low for an initial 127-130 consolidation before breaking back up to retest the 133.45 high possibly even the 134.25 confluence point before resuming the decline to at least 123.20.
We will resell this rally with stops back at the original 135.10. And if we needed any other reason for this strategy.
Then Euro Swiss somewhat perversely remains our guide...last November 22nd it suggest Sterling was here prior to the sharp intervention style rally...and now suggests it is in the early stages of a consolidation top.
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