I’ve already got a long pound position working in my favor, but I can’t help but keep an eye on this ascending triangle resistance on Guppy’s daily time frame.
Long GBP/JPY Idea
This long-term triangle pattern has been on my radar for quite some time now, as I’ve previously shorted after a test of resistance but chickened out too soon. I also thought I spotted a support breakdown before, but this turned out to be a fake out and price is now back to testing the top.
This time, it looks like pound bulls are strong enough to bust through the ceiling and push for a longer-term rally. The triangle chart pattern is more than a couple of thousand pips tall so the resulting uptrend could be of the same size.
I’m not too keen about hopping in a long position at market, though, since I’ve already got a long GBP/AUD trade open and stochastic is already indicating overbought conditions. Besides, it’s the end of the week and profit-taking seems imminent, possibly allowing this pair to dip to a better entry level.I’m more inclined to wait for a bullish breakout then keep my eyes peeled for a chance to hop in on a quick pullback or retest of the broken triangle resistance. That way, I’d get stronger confirmation that pound strength is here to stay and also aim for a better R:R compared to a breakout entry.
The latest U.K. CPI reports and BOE decision convinced me to keep a bullish bias on sterling, at least until Brexit risks starting kicking in. So far, the lack of progress from the latest round of negotiations has seemed to be positive for the pound because there has been no major challenge to the status quo… yet.
I’m also on the lookout for additional yen volatility during the BOJ statement next week as this central bank has slowly been phasing out its dovish stance. Apart from that, I’m also wary that risk-off vibes could return any minute now as the absence of threats from North Korea for the past few days might just be the calm before the storm.
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