May 30 to June 3, 2011 Weekly Winner: GBP/JPY Makes It Rain 350 pips!

Before we get the ball rollin’, I suggest y’all read my introductory post on the Weekly Winner to refresh your memory on my trading framework. Done? Cool, let’s get started!

May 30 to June 3, 2011: GBP/JPY Price Action Review

GBP/JPY Hourly Chart

To be honest, I don’t think anybody saw this coming when they came back from Memorial Day weekend. After the snoozefest we saw on Monday, GBP/JPY shot up the charts early on Tuesday as the yen took a hit to the midsection after Moody’s put Japan on downgrade watch. This sent yen pairs soaring, and saw GBP/JPY climb all the way up to 135.00.

It was all downhill from there though, as this lined up with the top WATR. GBP/JPY gave up all its gains over the next few days as poor economic data (U.K. manufacturing PMI) and risk aversion (U.S. ADP report) pushed the pair much lower. It eventually bottomed out just below 131.00 before recovering to close at 132.00 by Friday’s close.

Obviously, the clearest and easiest play here was to go short at 135.00, which lined up with the top WATR. Stochastic was also giving us overbought conditions, indicating that there were no more buyers left in the market.

We could have gone short at 135.00 and since we were picking a top, we could have used a tight stop of 50 pips. Had we rode this all the way down and aimed for the opposite WATR, we could have made nearly 350 pips. That’s a sweet 7:1 reward-to-risk ratio, baby! Can you Dirk it!?

Pretty simple trade eh? Did you make any pips off trading Guppy this week?

  • Todor

    good amout of pips 🙂
    Traded gbp/jpy only 3 times last week. I was more focused on gbp/usd.
    2011.06.01 13:32sellGBP/JPY133.5380.0000.0002011.06.01 19:54132.504-0.820.000.00103.42011.06.02 15:08sellGBP/JPY132.520133.110132.1502011.06.02 15:57132.334-0.820.000.0018.62011.06.02 15:15sellGBP/JPY132.690133.110132.1502011.06.02 15:57132.329-0.820.000.0036.1

    • Todor

      sry for this. I guess it is unreadable.

      • cyclopip

        Sweet numbers there, bud! Looks like you made money on all your positions. Where do you see GBP/JPY going this week?

        • Todor

          Hi CycloPip,

          there only one way to go up up up 🙂 and this will happen after it retraces to 131.00 which by the way already happened so it is time to buy 🙂
          I bought already EUR/JPY. I believe this week is going to be bullish for the european currencies and the news are not going to stop its move up.

          What do you think?

          Greets from Munich,


          • cyclopip

            130.50 served as a good support level in the past, so that may be the line in the sand for this week. 

            As for the European currencies, it will most likely depend on what is by the BOE and ECB during their interest rate decision statements. If they hint that they could raise rates soon, we may see the pound and euro rally this week.

          • Todor

            I cannot wait till Thursday. I bought another EUR/JPY at 117.00. I believe that traders have good expectations about the rate decision and will push the pair to 120.00 in the next 48 hours. So i could close my positions before the rate decisions. Depending on that i can reenter again.

          • cyclopip

            117.00 certainly seems like a significant level on EUR/JPY. You’ll notice that the rising trend line passes through right around that area. I’d be careful about keeping trades open over the rate decision though. You know how unpredictable the ECB and the markets are!

            Best of luck to you, Todor!

          • Todor

            Thanks mate! I just closed one trade on GBPJPY. Looks like the excitement about the coming news went to 132.00 and turned around. So i was forced to close it…prolly it will go up again in the next 2 hours just before the news but i dont want to risk anymore.