Remember that GBP/JPY ascending triangle setup I was looking at weeks ago? The one I thought I already missed? It looks like this play is still valid after all!
The pair is now testing the triangle resistance around the 162.00 major psychological mark, which appears to be keeping gains in check. This lines up with the top WATR and the previous week high, adding to its strength as a ceiling. Stochastic is indicating overbought conditions and is starting to head south so price could follow suit.
The pound has been rallying for the most part of the week, which has worked in favor of my other trade, but the risk-off environment could prevent the currency from making headway past this key resistance area. The U.K. has yet to print its second GDP estimate later today and any downgrades from the initially reported 0.4% figure could spur losses for this pair.
I’ve set my sights on the triangle support around the 157.00 handle for my ultimate profit target but I’ll be ready to exit early to avoid any weekend risk. I’ve set my stop past the 165.00 mark to give me room to cut losses in case price breaks past the triangle resistance.
Here are the details:
Short GBP/JPY at 161.25, stop loss at 165.25, profit target at 157.25 for a potential 1:1 return-on-risk. I’ve risked 0.50% of my account on this setup so don’t forget to review our risk disclosure if you’re taking the same trade.