Orders Cancelled: 2011-12-14 02:09
Looks like lady luck wasn’t on my side this time, as I missed out on getting triggered on my GBP/JPY trade! Now it’s trading near the bottom of the channel! Drats!
One reason why risk aversion was so rampant late in the New York session was due to FOMC statement. While our buddies over at the Fed maintained their stance on interest rates, they didn’t tip their hand and give any indication as to their plans of more quantitative easing measures. This led to a strong sell-off late in the day, pushing GBP/JPY all the way down to the bottom of the descending channel.
So, a missed trade for me, but no biggie – at least I didn’t get burned! For now, I just gotta keep looking for other setups. EUR/JPY is now approaching its 2011 low, so that could provide a nice buying opportunity for that pair.
That’s all for now, folks. Good luck trading the rest of the week!
Trade Idea: 2011-12-13 03:20
We made good money on our EUR/GBP trade last week. Let’s see if we can follow up with another winner with this GBP/JPY channel play!
If the chart above looks familiar, that’s because I ripped it off Big Pippin’s Daily Chart Art this morning! The only difference is that I included the lines that we pointed out yesterday in my Weekly Watch.
Anyway, the falling channel on GBP/JPY’s 1-hour chart is crystal clear, and I’m hoping it’ll stay intact so that I can grab a few pips off it.
Fundamentally, I think the pound still stands to lose a few pips against the yen, especially if you consider the gloomy outlook for the U.K. economy.
Plus, the European debt crisis is still under the spotlight, and we all know how exposed the U.K. is to European debt! I think this will remain a major market theme in the days to come, and I see it taking its toll on risk appetite.
Even with all the recent “developments” being made in the EU, something tells me that the markets will remain skeptical until they see concrete steps being made towards resolving the debt crisis. So until European officials make some ground-breaking announcements (such as more bond-buying from the ECB), I think risk appetite will remain subdued.
Looking ahead, there’s a bit of event risk involved in the release of U.K. CPI data at 9:30 am GMT, but I think that it’ll ultimately work in our favor. According to the BOE, inflationary pressures have eased, and the forecasts support this belief. CPI is expected to fall from 5.0% to just 4.8%! If the report does show weak inflationary data, it would suggest that the BOE has more room to ease its monetary policy, which could sap demand for the pound.
So here’s what I’m thinking:
Short GBP/JPY at 121.80, stop loss at 122.20, profit target at 121.00.
My profit target is set conservatively at the 121.00 handle since the market has flirted with this level several times already. As for my stop loss, I think that as long as I place it above 122.00, I should be safe.
So what do you guys think? Anyone care to join me?