The GBP/JPY pair fell slightly during the Thursday session as the pair finally ran out of steam. This pair has shot straight up from the 1.2 5.50 region to present levels and slightly higher in a very short amount of time. This can be seen by the ridiculously sharp angle of ascent over the last two weeks.
I believe that the 130 level should act as support now, and a pullback from this shooting star formed on Thursday would be a welcome sight as I would be more than willing to buying this pair going forward. I want to see a little bit of a pullback though, and then some signs of support. At this point time, if you are buying the currency pair you are simply chasing it, and that is the quickest way to lose money.
129 and 130
I believe that the two most important numbers on this chart are the 129 handle, and the 130 handle. This is essentially a "zone" as far as I can tell, and should offer quite a bit of support. This is based upon not only the consolidation area which is broke out of, but the longer-term charts as well. Certainly, we could make some type of cheeky move and try to sell this market, but quite frankly I believe that would be a very risky move when you can simply wait for the market come back to you.
It should be noted that several of the yen related pairs all fired off shooting stars for the Thursday session. While it was a low liquidity session in North America, I still I am concerned about the shape of these candles and enough to wait for pullback to get involved again. I even closed out a long NZD/JPY position early on Thursday as I saw the market struggle. Now that we have gone so parabolic, a pullback is not only necessary, but it will be welcomed by the buyers of this market.
I believe that what we are seeing in all of the yen related pairs will continue for the next day or two, and then we will see some type of supportive candle giving us another signal to start buying again. Without a doubt, I think shorting the yen, and other words going long of these pairs, will be the trade of 2013.