GBP/JPY: Going Long at the Hot Spot – Trade Closed

Trade Closed: 2013-06-27 01:48

Just when I thought my date was going well, price action got upset and stormed out of the room, taking my stop loss with it!

GBP/JPY Chart

The rising trend line actually held nicely as support for a while, and I got a pretty great entry point, as price bounced right off support at around 149.90. In fact, I was up more than 40 pips at one point, when price was testing 150.30.

But just when I was getting comfy in my seat and about to enjoy my meal, GBP/JPY made a U-turn and slipped past the rising support trend line! The pair eventually dropped to as low 149.30, hitting my stop loss along the way.

It appears that yen strength against European currencies, as well as some dovishness from the Bank of England was responsible for the drop in GBP/JPY late yesterday. According to the BOE, there is still some concern about imbalanced recovery around the world, while high levels of debt pose a major threat to the U.K. economy.

In any case, overall sentiment was definitely against the pound, and I got stopped out midway through the New York session.

Stopped out at 149.40: -50 pips, -0.50%

I have to admit this one stings a little bit, because I got stopped out near the bottom, and it seems that the channel may still be intact. Should I have gone with a wider stop? Right now, the trend line is serving as resistance now, so let’s see how this pans out.

At least I’m still alive on my EUR/GBP trade. I’m still contemplating how I wanna play that one out. I’ll be sure to hit y’all up with an update should I choose to make any changes!

Trade Idea: 2013-06-26 3:20

Is this my chance to finally catch the yen on its way down? I sure hope so, because the technical setup on this pair is superb!

GBP/JPY Chart

On the pair’s 1-hour chart, we’ve got a major confluence zone around the 150.00 major psychological handle. Get this: not only is it an established support level, but it coincides with the bottom of a falling channel and also intersects a rising trend line! It’s a hot spot, baby!

I feel that this is my chance to finally catch the yen as it drops, which I think is the likely scenario in the long-term since the BOJ is all about easing monetary policy. On the U.K.’s side of the equation, I think we’re starting to see some improvements in the economy, which may support the pound. In recent announcements, the BOE didn’t seem so worried as it once did. The noted improvements in the economy, along with a predicted rise in inflation, should keep the central bank from further easing in the near term.

So here’s how I set up my trade:

Buy GBP/JPY at 149.90, stop loss at 149.40, profit target at 151.00.

I set a buy order right near the previous lows, a few pips below the 150.00 handle. As for my stop, I think I should play this one tight and set it right below the rising trend line. I’m hoping that price will eventually rise back up to touch the top of the falling channel.

What do you guys think? Share your comments and suggestions below, fellas!


  • strictly86

    Good technical setup, I will be waiting to go short with the trend

  • Husam

    I did it just 2 hours before you mention it here, I earned 130 pips. congrats.

  • I bought at th

    I bought around that spot thinking it will hold.. Then right after US GDP news it triggered my stop loss

    • cyclopip

      Same thing happened to me, bud. Looks like we entered too soon/placed our stop too tight, because now the pair is shooting up. Drats!

      • I bouught at th

        Forming 15min doji right at that trendline after the GBP news probably gonna go up but will see as a lot of USD data is coming out soon

  • arun

    I have entered at correct time and made some good pips. you can split trend lines, so that you can get accurate “HOT SPOT” to enter into the trade.