To better understand my trading framework and see why I take note of the weekly open, I suggest you check out the introductory post on the Weekly Winner!
August 22 to August 26, 2011: GBP/JPY Price Action Review
We barely any saw strong moves as GBP/JPY pretty much stuck in a range of less than 80 pips throughout the week. The only time it really made big one directional move was on Friday, when higher-yielding currencies dropped following Bernanke’s speech. Of course, the pair recovered once traders realized that Bernanke merely postponed the decision for more QE3 for next month or for November.
Despite the tight trading, there were a bunch of opportunities to make pips off GBP/JPY last week, and you could have made all those pips by playing just one horizontal level – the Weekly Open.
As you can see, paying attention to the WO can pay serious dividends, especially in weeks where there is a lot of consolidation. If you look close enough, there were at least 10 opportunities to buy or sell off the WO at 126.22.
If you went with 30-pip stops and aimed for 30 pips, you probably would have lost 3 times and won 7 times. In the end, you would have come out ahead by 120 pips. Doing some simple math, that’s a 4:1 reward-to-risk ratio. Not bad!
Did any of you play the weekly open on GBP/JPY?