The pound was large and in charge at the start of the week as it climbed up from the weekly open and never looked back! A healthy risk appetite and a higher-than-expected reading from the U.K. CPI report saw GBP/JPY climb past the 126.00 MaPs. But after that, things got a bit… well, weird.
On Wednesday, price steadily declined as markets anticipated the release of employment data and MPC meeting minutes. The releases were initially very bearish for the pound. And why wouldn’t they be? No one was expecting to see such a drastic rise in unemployment (7.7% to 7.9%).
But just as quickly as price dropped at the sight of these results, the pair turned back up to climb to a new high. Finding support at 125.50, the pair managed to hold its ground despite very bearish results as risk appetite buoyed the pound higher. The move didn’t make sense to a lot of traders, including yours truly, especially since the MPC just did something that it hadn’t done in a long time- unanimously agree to hold interest rates steady.
From then on, it was pretty much smooth sailing for the pound. It found support at the 126.00 handle, while finding resistance at the upper WATR. Here it remained range-bound until the end of the week.
I think by now you know the setup that I’ve been raving about. Yes, that perfect range over the second half of the week!
Shorting at the WATR (or going long at the 126.00 MaPs) while using a stop of 40 pips would’ve been just enough to land us 2:1 winners each and every time, supposing we had taken profit at the 126.00 MaPs (or WATR). It was practically a pip-making machine!
So, were any of you guys able to catch this bad boy?