Yes, price did hit 125.50, as the pound rallied hard during the London session. However, thanks to the spread, my profit target order wasn’t triggered!
Once I saw price bounce off the minor resistance level, I decided to just move my stop to breakeven to avoid any heartbreak. It turned out to be a good decision, as the yen pairs dropped hard late in the New York session.
Stopped out at 125.06: 0 pips / 0.00%
I can’t help but feel a little bitter about this trade. After all, I got the perfect entry, my analysis was sound, AND my profit target was hit! But noooo, I didn’t make any moolah because of the spread.
At the same time though, I also understand that I’ve gotten SEVERELY lucky in the past and that paying for bigger spreads is one of the costs I’ll have to pay for playing my favorite pairs, the cross-currency pairs.
I hope those of you who joined me on this trade had a lot better luck than I did!
Trade Idea: 2012-08-23 00:30
You gotta strike while the iron is hot… and on GBP/JPY, it’s scorching!
After a couple of days of knocking on the 125.00 handle’s door, pound bulls were finally able to break through this resistance level yesterday. They took the pair all the way up to 125.50 before the market retreated.
Now it’s back in the 125.00 strike zone where the week open and previous week high are located… but this time, this area is acting as a support level! With Stochastic indicating a bullish divergence and price forming long-wicked candlesticks, I decided to buy GBP/JPY at the market.Besides, something tells me GBP/JPY could see a prolonged bull run. With renewed optimism in the eurozone and Fed member Lockhart signaling diminishing prospects of QE3, I think risk sentiment could shift in favor of the pound in the coming days.
So here’s what I did:
Bought GBP/JPY at market (125.06), stop loss at 124.50, first profit target at 125.50, second profit target to be determined.
My stop loss is set just below a narrow range, which I think is tight enough to give me a decent return on risk but is also wide enough to give the trade room to breathe. I plan to close half my position at the recent high around 125.50, but I haven’t quite decided where to close the remaining half. I’m hoping I can bag a big winner by letting the rest of my position ride. Lastly, I’ll be risking 0.50% of my account on this trade, since this is more of a day trade setup.
What do y’all think? Is this something you guys would trade? Hit me up with your comments and suggestions!
This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.