Forex Trade Adjustment: 2014-04-22
Since my last trade adjustment, GBP/JPY moved up another hundred pips or so but there are signs the move may be slowing. It’s time for one more adjustment to lock in more profits.
Original Trade Idea: Rising Trendline Play on Guppy
It’s been quite a move higher for Guppy since I entered my trade at 170.00. And this week, we saw a continuation of last week’s rally as European traders came off the holiday weekend betting that we’ll see more positive data, specifically from next week’s U.K. preliminary GDP reading.
The pair is up about 250 pips since I entered, and not surprising after such a quick run higher, I am seeing a sign that the move may be slowing or on the verge of reversing. On the one hour chart above, the stochastic is making a lower “high,” creating a bearish divergence signal. Of course, it could turn out to be a false signal of a reversal, but to protect my profits, I decided to adjust my full position stop to 171.50 to lock in a 150 pip profit.
So, I didn’t get to more as I didn’t see a retest of the 171.00 area, but I’m glad to see the move higher. And with the BOE meeting minutes tomorrow and the divergence signal, it’s a good idea to reduce risk/lock in profits as I did, but I leave myself room for my profits to run further.
For now, I’ll wait and see if the market will get up to 173.00. If it does, I’ll definitely trail my stop again and add a small position, with 174.00 – 175.00 as my new targets. Stay tuned!