Cross-Eyeing: Head and Shoulders on GBP/JPY – Orders Cancelled

Orders Cancelled: 2011-10-20 01:53

GBP/JPY 1-hour chart

We’ve been seeing some topsy-turvy movement on Guppy this week as it has been bouncing to the beat of risk sentiment. After finding tough resistance at the 38.2% Fib, GBP/JPY dropped on poor data earlier in the week, falling to as low as the 120.00 handle.

The pair then recovered yesterday following the release of the latest MPC meeting minutes. I decided to leave my orders open since the head and shoulders pattern had yet to be invalidated. However, the pair only rose to as high as 121.70 late in the New York session, and it’s now trading below 121.00. So much for that!

I’m a little doubtful that GBP/JPY can make its way back up to my desired entry point, so I will be taking off my orders for now and start looking for other setups.

For those of you who caught that bounce off the 38.2% Fib, congrats!

Trade Idea: 2011-10-18 03:20

GBP/JPY, I’ve got my eye on you!

GBP/JPY 1-hour chart

Ever since it dropped to 121.00, GBP/JPY has slowly been crawling up the charts. I think the area of 122.00 presents a prime spot to short because it lines up well with the 61.8% Fibonacci level and the weekly open! And Stochastic is practically screaming “SELL!!!” with the way it’s forming a bearish divergence by setting a higher high while price sets a lower high. Oooh baby!

If you take a closer look, you’ll see that the area of 122.00 has acted as resistance in the past. Actually, this setup makes a strong case for a potential head and shoulders pattern.

I think that it’s unlikely that price will cross 122.00 again soon, considering that risk aversion seems to be creeping back into the markets. Also, I’m expecting tomorrow’s MPC meeting minutes to remind the markets about the Bank of England‘s dovish stance. I think that should be enough to keep demand for the pound subdued in the meantime.

Here’s my plan:

Short GBP/JPY at 122.00, stop loss at 122.80, take profit at 121.00.

So what do you guys think? Anyone care to join me?


  • pip

    sorry about it… me neither :(