With less than a month to go before the EU referendum, Brexit fears are creeping back in and weighing on the British pound. Here’s what happened to my GBP/JPY trade idea.
I missed the boat! Arghhhh!
I planned on shorting at the ascending triangle resistance near the 162.00 major psychological mark but price didn’t go all the way up to that area. As I’ve noted in my Weekly Watch blog post, the pair actually seems to be in a symmetrical triangle so I should’ve set my short order much lower, probably around the 161.50 minor psychological mark.
In retrospect, I think I could’ve also entered on a break of that short-term consolidation above the 160.00 handle. After all, Japanese Finance Minister Aso agreed to refrain from competitive currency devaluation in the latest G7 meeting, allowing yen bulls to charge without worrying about central bank intervention for now. Besides, the risk-off market environment these days could mean more rallies for the yen.
Since the pair has already dropped by around 300 pips from the latest high, I’ve decided to cancel my open orders and move on to a new setup. So far, I’ve got my EUR/GBP short position open and I’m counting on Brexit opinion polls to keep showing a wider lead for the “stay” camp to lift the pound against the euro.
I really should’ve been more patient in waiting for a pullback on this one, but I guess I got too excited to hop in after the U.K. printed stronger than expected retail sales figures last week. I was afraid of missing the move so I hopped in below the .7700 handle instead of trying to catch the retracement to the 38.2% Fib or .7750 area.
Still, I’m not too worried since I’ve got a wide stop past the 61.8% Fib and .7900 mark on this one. Data from the euro zone has been mixed so far but we’ve still got the German ZEW economic sentiment index and the BOE Inflation Report hearings lined up today, which might mean more volatility for this pair.
I’ll keep you posted about any quick adjustments through my Twitter account so make sure you’re following me and don’t forget to check our risk disclosure if you’re taking these setups also!