Trade Reviews: EUR/GBP and GBP/JPY

So much for my bearish pound bias! It looks like the anti-Brexit sentiment is gaining support these days so I’m out of my long EUR/GBP and short GBP/JPY trades. If you’re not sure what I’m talking about, make sure you look at my initial ideas first.

EUR/GBP Trend Line Pullback

As I’ve mentioned in my latest Weekly Watch, I gotta remember that the trend is my friend until the bend at the end! EUR/GBP had been trading safely above a rising trend line right until that strong breakdown last week.

EUR/GBP 4-hour Forex Chart

EUR/GBP 4-hour Forex Chart

At that time, I thought we’d see another bounce since U.K. data (jobs and retail sales) turned out much weaker than expected. Heck, the pair even held its ground despite a few dovish remarks from the ECB! Still, remarks from top officials such as U.K. Chancellor Osborne and U.S. President Obama urging Brits to vote for staying in the EU spurred a very strong pound rally.

Here’s how this trade turned out:

P/L: -195 pips / -0.50%

GBP/JPY Support Turned Resistance

Now this one was pretty quick, as I tried to get in on the trend line pullback much later in the week before the yen selloff took place. I couldn’t figure out what caused the sudden upside breakout apart from the anti-Brexit GBP rallies, but Pip Diddy mentioned that BOJ easing speculations drove yen pairs much higher on Friday.

GBP/JPY 4-hour Forex Chart

GBP/JPY 4-hour Forex Chart

I’m thinking that the actual BOJ statement later on this week could still usher in some yen strength especially if central bank officials decide to sit on their hands. But now that the technical setup is invalidated, I thought it best to just cut my losses and move on to a different trade. Besides, I’m seeing a bit of a double bottom and a bullish flag on this chart!

Here’s how this trade turned out:

P/L: -420 pips / -0.38%

As you’ve probably guessed, I’m feeling bummed out about my trade performance last week as I’ve realized that I jumped in the trends too late. Nonetheless, I’m still gonna give myself a small pat on the back for cutting my losses on GBP/JPY. Now that we’re seeing early signs of reversals on these pairs, do you think it’s time to shift my bias and take the opposite positions?

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  • Ashish Taneja

    Hey Mate,

    The work your doing here is commendable.

    Though this is my first post but I’ve religiously ready most of the articles, course etc..

    I should’ve commented when you posted your analysis on GBP/JPY. My 2 cents were opposite to you and i’ve taken a long position today.

    Reasons:

    Fundamentally:
    GBP has simply been shrugging off bad news. In 2 occasions last week, GBP rallied after bad data. That’s a fundamental divergence and has me on the lookout for long setups vs. weaker currencies.

    Technically:
    I took the trade on 4H BE this evening,
    The long term down trend line has been broken hence i called for a long position.
    Though it looks OS but i;m targeting : 164.200 cautiously..

    Cheers

    • Cyclopip

      Thanks for the kind words! I’m still reeling from these losses but it’s good to know that you appreciate my posts.

      In hindsight, I really shouldn’t have taken another GBP short trade since I’ve already got one open. Or I should’ve been more aware of this shifting bias on the pound last week and probably hedged with an opposite position. I did have some doubts after seeing GBP rally with weak jobs and retail sales data, so that probably was a sign that other factors were driving price action then, huh?

      So far so good on your GBPJPY long! Careful ahead of the BOJ statement, though. Good luck!