GBP/JPY longs were the best FX trade this month

Technical Analysis

A look at FX monthly performance and the chart

The pound was easily the best performer this month gaining 2.68% against the US dollar, followed by CAD and CHF. The yen was the laggard, down 0.45% and AUD was the only other G10 currency down against the dollar.

A big move in GBP/JPY came yesterday as the pair soared to the highest since 2018. It touched 156.07 in a 188 pip daily move. It’s now facing the 2018 high of 156.61 and that’s a huge resistance level on the chart:

Equally impressive is that this chart is coming off a double bottom last year and has a clear target at 190.00. You would have to construct a narrative of a boom coming out of COVID in the UK and ongoing malaise in Japan but the BOE can shift its plans quickly and a few rate hikes could get us there over time.

This chart also looks much like the recent gold daily chart, which formed a similar double bottom, then briefly stumbled at resistance before busting through.

I like the trade in a lot of ways, but it’s a ‘buy on the break’ trade not a ‘buy and hope for a break’.

What do you think will be the best trade of June?

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