Cross-Eyeing: GBP/JPY Range Play – Taken and Closed!

Trade Idea: 2011-04-12 22:44

GBP/JPY Hourly Chart

Earlier this week, I tweeted about a setup I spotted on GBP/JPY. It was a simple technical play, based on a prior support level from the previous week.

I noticed that the pair was ranging and finding support around the 138.20 price area. The yen was rallying on Monday but I felt that it was just a natural pull back since yen crosses had been climbing up the charts like Sly Stallone in Cliffhanger (I don’t care what you say, I love that movie).

I set a limit order to buy at 138.20, and went with a tight stop of just 50 pips. I was aiming for the top of the range near 139.70. That’s about a 3:1 reward-to-risk ratio. Pretty sweet, eh?

Because my long EUR/JPY position was still open, I only risked half my normal exposure (0.50%) on the trade. I recognized that the two pairs were somewhat correlated, so I wanted to limit my exposure on short yen trades.

Midway through the New York session, I saw that I was up nearly 100 pips, so I moved my stop to breakeven (I also tweeted this) to avoid any crazy moves that might happen while I was away. It turned out to be a GREAT decision, as the pair dropped later in the day… then dropped another 200 pips on Tuesday during the Tokyo session!

Long GBP/JPY at 138.20, closed at 138.20 = 0 pips / 0%.

In any case, while I’m a little annoyed that I didn’t make any pips on this trade (I was up almost 100 pips already!), I’m happy that I adjusted quickly and didn’t take a hit! Now on to find another setup to take!

  • enechinedu

    i am happy to be in babypips.

  • enechinedu

    i am happy to be in babypips.

  • Cyclopip

    @enechinedu

    We’re happy to have you here as well, bro. What pairs are you trading at the moment?

  • Cyclopip

    @enechinedu

    We’re happy to have you here as well, bro. What pairs are you trading at the moment?