2007-01-17 09:10:00

Our trade triggered approximately 8:30 am EST this morning, but it looks like the pair has found resistance at 237.00. UK CPI reports came out better than expected, which appearantly did nothing to help our trade. Because price action isn't what I was expecting after the UK CPI report, it looks like GBPJPY is due for a correction from here, so i have decided to close the trade (currently at 236.75) for -30 pips loss.

Tonight we are taking a look at one of my favorite pairs to trade: GBPJPY! I especially like it now after another surprise rate hike by the Bank of England, thus creating a nice 5.0% interest rate differential between the British Pound and the Japanese Yen. But that's for the long term. In the short term, I think traders will remain bullish on the British Pound and ignore the fact that we have the Bank of Japan interest rate decision in the next few days.

My only concern is that Cable has been on fire lately, and that we me see a little bit of a retracement. No worries though, it just means we'll get in a better price. We also have event risk later today at 4:30 am EST with UK Producer Price Index. We may see stronger numbers which supports the Bank of Englands outlook on the economy and our trade. Here are a couple of long trade ideas:

Long GBP/JPY at 237.05, stop at 236.55, pt1 at 237.35, pt2 at 238.00

Remember to never risk more that 1% of your account on any single trade, so please adjust your position sizes accordingly.

Good luck and good trading!