Ready to Pounce on GBP/JPY Double Top – Trade Invalidated

Trade Cancelled: 2012-10-25 03:47

GBP/JPY 1-hour Chart

No trade this time around, and it looks like the Chinese HSBC manufacturing PMI was to blame!

Needless to say, GBP/JPY bulls had a field day with this report. The PMI’s impressive increase (from 47.9 to 49.1) killed the market’s appetite for the yen as traders dumped the low-yielding currency for higher-yielding assets. They didn’t even let GBP/JPY dip low enough to hit the double top neckline around 126.80! What a total bummer, dude.

Since price eventually rose to form a new high, my trade idea has essentially been invalidated. But I’m not giving up just yet. With the U.K. GDP report due in just a few minutes, I’m looking for other opportunities to make pips off the pound.

Right now, I’m thinking of trading the bearish flag on EUR/GBP, but I may consider entering a position on GBP/JPY too. In any case, I’ll be sure to keep you guys posted in case I do decide to take a trade before the weekend.

Thanks for following, fellas!

Trade Idea: 2012-10-24 00:38

GBP/JPY 1-hour Chart

Over the past couple of weeks, the yen’s performance has been like my NBA 2K13 skills – nonexistent! Yen crosses have been on a tear, with GBP/JPY rising a solid 300 pips in October alone. However, the recent trend may be coming to an end, as the pair found solid resistance at the 128.00 MaPs and seems to be forming a double top. Is it time to pull the trigger?

Looking at the markets, it seems that we’re still seeing some risk aversion as poor earnings reports have tempered expectations. With the S&P500 dropping 1.40% yesterday, we may just see more selling take place over the rest of the week.

One thing that does concern me though is that we’ve got the FOMC statement headed our way late in the New York session. This report normally leads to a ton of volatility in the markets, so it’s tough to leave orders in ahead of the statement.

That said, I won’t be placing orders just yet, but I’ll have my trigger finger ready just in case we do see a strong candlestick close below the neckline at around 126.80.

What do you guys think of this setup? Do any of you plan to trade Guppy this week?

Risk Disclosure
Q3 2012 Trading Performance Review
Weekly Watch: October 22 to 26, 2012
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  • RB

    Love this set up. I think this is purely a risk sentiment play cyclopip. I’m with you on a break below the neckline and confirmation on the DOW and S&P.

    The S&P and Dow are both at a critical technical level. Both have broken this years upward channel and are now edging against the bottom of the multi-year bull channel (conveniently the psychological 1400 and 13000 levels too!).

    FOMC statement today could give some direction at this important level. If the market doesn`t like what they say and these major levels break, we`ll see a similar break lower on the GBP/JPY – potentially a big ride down (until the BoJ intervenes :p).

    • cyclopip

      Unfortunately, Guppy has shot up for new highs. For now, just gotta keep an eye on that 128.00 handle, which may just prove to be a support level in the coming weeks!

  • Cole

    This trade absolutely ruined me. I was sure that we would see sellers keep up the power, so I made the trade early and didn’t even set a stop loss. I made a huge mistake on this trade and after banking 220 pips for the week, this one brought me back 300.
    Ouch. That one stung bad…