Trade Updates: Short GBP/JPY and Short EUR/GBP

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!

GBP/JPY 4-hour Forex Chart

GBP/JPY 4-hour Forex Chart

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.

EUR/GBP 4-hour Forex Chart

EUR/GBP 4-hour Forex Chart

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!

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  • forzion

    Quite wild price action in EUR/GBP these days. Next key support seems to be the 0,7500 area.

    • Cyclopip

      Yes, you are definitely right about that! I do wish I was able to enter at a better price on that quick pullback to .7750 but it does look like the momentum could take it down to the .7500 level. Are you in this trade? And did you keep your GBPAUD long open?

      • forzion

        I closed my GBP/AUD trade unfortunately and missed another 800 pips. But at least it was profitable. This month do not have a lot of time to analyze the market so I stay more at the sidelines working hard on new trading strategy to be able enter trades even without sitting at the screen.

        With EUR/GBP it was quite quick. If I would not open the order based on weekly chart I would miss this one too. So I have only one tiny position from 0,7900. But I think it can go lower. Month is almost at end and we have nice candlestick formation in monthly chart signaling possibility for more weakness. I am considering to go long from 0,7400 – 0,7500 area where Fibo retracement levels and SMAs are but we can get into consolidation phase now cause of still questionable outcome of Brexit.

        • Cyclopip

          Yep it does look like the public opinion polls on the Brexit have been pushing EUR/GBP this way and that. I’m still short right until that .7400-.7500 Fib retracement area you mentioned. Congrats on your GBPAUD long position!

  • Akinniyi Fadipe

    I am on this trade(south) on the basis of head and shoulder reversal pattern; I am taking my profit at a major support at 0.743

    • Cyclopip

      That’s the level I’m aiming for with EURGBP as well! Just a bit worried about this latest pullback because of the GBP selloff on the Brexit polls but the head and shoulders still looks intact. Are you still on this trade?

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