Cross-Eyeing: GBPJPY – Trade Closed

Trade Closed: 2010-03-25 22:11

PoD Chart

It looks like I was too aggressive with this one, shorting way too early, and placing my stop too tight. Do’h!

In retrospect, a better decision would’ve been to sell the pair when it hits the falling trend line, which I missed by the way, at 138.00. It was a psychologically significant round number and stochastics would’ve showed overbought conditions… Or maybe, I should’ve closed my trade just before the UK released their retail sales report, which printed better than expected results. I could’ve locked in a few pips then. Then again, things are always clearer in hindsight.

Stopped out at 138.00 with a total loss of -105 pips / -1.00%

It’ll be interesting to see if this trend – line holds – we’re seeing a lot of yen weakness across the board. In fact, the USDJPY has just broken past a long term downtrend line. If that pair continues to rise, we may just see other yen pairs rise as well.

Trade Idea: 2010-03-22 22:49

PoD Chart

I spy with my one eye a nice little setup on the charts. Could this be a nice time to short the GBPJPY?

With stochastics not at overbought territory yet, I suspect the pair could still head higher. I’m looking short the pair right when it tests the intersection between broken ascending trend line support and the 50% Fibonacci retracement level. I also like how the 50% Fibonacci retracement level lines up nicely with 137.00, a nice, juicy, round number.

On the economic front, I took a look at Pip Diddy’s economic round up today and it looks like we’ve got some CPI data coming out from the UK today. Last month, there were concerns that inflation was getting out of control, having posted a 3.5% increase in consumer prices. Rising prices are expected to have eased slightly in February, showing just a 3.1% uptick.

Now, as my buddy Forex Gump said in his post yesterday, it seems that the BOE wants to weaken the pound for a couple of reasons. If inflation looks to remain subdued, we could see the BOE keep rates at lower levels, or even expand their quantitative easing measures, which in turn could lead to even more pound weakness.

I’m also keeping my eye out for the CBI Realized sales index and the BBA mortgage approvals figures. The sales index is projected to post a lower reading, while the annualized rate of mortgage approvals is expected to dip. Now, if these reports all come in worse than expected, it would show even more instability in the UK economy.

I have set two profit targets: the first one at the previous day high and the second one at this year’s low. I placed my stop just a couple of pips above the 61.8% Fibonacci retracemenet level to give my trade some room to breathe.

Short GBPJPY at 136.95, pt1 at 134.60, pt2 at 132.60, stop at 138.00

22 comments

  1. PipWolf

    I was short on the guppy towards the end of last week and exited on Friday to avoid event risk over the weekend. I’ve been eying 137.00 to get back in. Nice to know that my idea isn’t completely off the mark :)

    Reply
  2. fed

    I am watching this setup as well. There are so many reasons to take this trade short from 136.80-137.00 area.

    Reply
  3. pipsprof.

    38.2% fib level would have been a more precise entry level, I got short from 1.3650 and i expect the pair to travel southward for some time to come baring any news that might favour the cable.Your set up is excellent though!!!!!! Together we win!!

    Reply
  4. PipWolf

    I was short on the guppy towards the end of last week and exited on Friday to avoid event risk over the weekend. I’ve been eying 137.00 to get back in. Nice to know that my idea isn’t completely off the mark :)

    Reply
  5. fed

    I am watching this setup as well. There are so many reasons to take this trade short from 136.80-137.00 area.

    Reply
  6. pipsprof.

    38.2% fib level would have been a more precise entry level, I got short from 1.3650 and i expect the pair to travel southward for some time to come baring any news that might favour the cable.Your set up is excellent though!!!!!! Together we win!!

    Reply
  7. pipsprof.

    @Nemoz,price already made it to 136.51 on the 22nd March on my mt4 platform at 18hrs GMT,though a little consolidation is taking place now,because this week is a light forex news week,overall the guppy is bearish and lets hope for some more bad news from Britain to serve as our fuel to drive down this stubborn pair.I have adjusted my stop to my entry already at 136.50,so whatever happens,my capital is safe.Happy trading!!!!

    Reply
  8. pipsprof.

    @Nemoz,price already made it to 136.51 on the 22nd March on my mt4 platform at 18hrs GMT,though a little consolidation is taking place now,because this week is a light forex news week,overall the guppy is bearish and lets hope for some more bad news from Britain to serve as our fuel to drive down this stubborn pair.I have adjusted my stop to my entry already at 136.50,so whatever happens,my capital is safe.Happy trading!!!!

    Reply
  9. fed

    the price came up to 137.20 area. short from 136.75. it is a great setup but again don’t risk more then 1
    % of you trading account for any trade.

    Reply
  10. fed

    the price came up to 137.20 area. short from 136.75. it is a great setup but again don’t risk more then 1
    % of you trading account for any trade.

    Reply
  11. Phepi

    Hello Cyclopip,

    I would only like to ask you a simple question: What Stochastics indicator do you use? How is it set?

    Thank you

    P.S.: I love your blog, it’s really of much help. Your input I find being great educational material. Keep up the grand work!

    Reply
  12. Phepi

    Hello Cyclopip,

    I would only like to ask you a simple question: What Stochastics indicator do you use? How is it set?

    Thank you

    P.S.: I love your blog, it’s really of much help. Your input I find being great educational material. Keep up the grand work!

    Reply
  13. engin

    14,3,3 ???? that is not slow baby its so fast
    also at a yen cross. you should try 30,10,10
    i am using that levels for 1 hour and 4 hour charts
    on the daily charts you should try 15,5,5

    Reply
  14. engin

    14,3,3 ???? that is not slow baby its so fast
    also at a yen cross. you should try 30,10,10
    i am using that levels for 1 hour and 4 hour charts
    on the daily charts you should try 15,5,5

    Reply

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