At the beginning of 2008, a reader mentioned what a nice head and shoulders pattern the FX symbol GBP/JPY was (for the non-initiated, that's the ratio of British Pound to Japanese Yen on the foreign exchange market).
The pattern wasn't just nice. It was breathtakingly perfect. Using the simplest method for measuring a price target, I took the highest price (reached on 7/22/2007, $251.14) and the neckline price ($221.05, marked at 3/5/2007) and calculated the difference, which was $30.09. I then subtracted the difference from the neckline price and got a target of $190.96 (that is, 221.05 minus 30.09 equals a target price of 190.96).
This week, on 3/16/2008, the price reached 192.48, which is an accuracy of 99.2% compared to the target price. Un-freaking-believeable. I had at the time (back when the reader brought this chart to my attention) that I'd sworn off FX but I would have loved to have made this trade. Just stunning.
