It is Friday afternoon and there will probably be very little interest to get too involved today ahead of the weekend, particularly in light of what happened this morning, but here is a trade idea for next week.
Although being short of Sterling has not been a great money winner recently, Sterling /Yen appears to be breaking some important technical support and looks as though it could be headed back to 170/171.
As can be seen by the 4 hour chart below, the cross appears to have formed a head and shoulder top and has broken down below the neckline (pink line) and also the longer term rising trend line from November 2012 which can be better seen in the daily/weekly charts below.
Adding to the bearish view, the cross has today broken below the daily Tenkan/Kijun, which are crossing lower at 173.68. If the cross finishes below both of these today, it will be the first time of doing so since 30 May and would add to the bearish tone next week.
I have sold the cross here at 173.30 looking for an eventual head/shoulder target of 170.70, with a SL placed just above the 100/200 HMA’s(173.85) at 174.05. More aggressive traders could think about leaving the stop loss above the right hand shoulder at 174.55. The first downside target would be at the 100 DMA at 171.80, which is also 61.8% of the move up from 169.53/175.35.
Not a bad risk/reward, but it may be better to wait for Monday to have a look and enjoy the weekend without the hassle!!
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