Before you take a look at this beautiful setup, I suggest y’all check out my introductory post on the Weekly Winner to guide you on my trading framework.
June 20 to June 24, 2011: GBP/JPY Price Action Review
If you were brave enough to hold a position and short the pair prior to the release of the MPC meeting minutes, you would’ve been rewarded very handsomely for it. Think Cyclopip handsome, baby! A 6:1 return on risk!
Strangely enough, GBP/JPY actually started the week off strong, climbing to the 130.50 minor psychological handle after receiving mixed feedback on the U.K. economy.
But I suppose the market was just setting itself up for the big plunge it would take later in the week. After the dovish MPC meeting minutes were released, the pair headed south and never looked back. It dropped over 200 pips from its high, and catching this move would’ve definitely been the trade of the week.
Assuming we had sold this sucker after the formation of the shooting star, at around 130.30, and used a 50-pip stop, we could’ve rode this bad boy all the way down to Monday’s low at the 129.00 major psychological handle. That would’ve been enough to land us an almost 3:1 trade!
But we could’ve made boatloads more if we had played this aggressively and added to our position and moved our stop accordingly after every 50 pips. Such a strategy would’ve yielded a solid 6:1 reward-to-risk ratio! Booyeah! You’d be done for the month!
Yeah, it sucks that I missed this move, but it was only because I was focused on a similar setup on EUR/JPY. Hopefully, my EUR/JPY trade – which is still open, by the way – turns out as profitable as this one!
If y’all have any comments on last week’s Weekly Winner, or if you have any trade ideas for the week ahead, let me know! Hit me up with some comments below, or send me a message on Facebook or Twitter. Peace!