Well that was fast! Sterling takes a dive over the past few sessions after Brexit drama intensifies at the turn of the new trading month.
Fib Resistance on GBP/JPY?
In case you missed it, Sterling bulls had a very rocky to September thanks to the Brexit story turning negative once again as U.K. Parliament battles the government over the Oct. 31 leave date.
It started yesterday as new legislation was proposed to block a no-deal exit from the European Union, and it didn’t take long to get a response from U.K. PM Boris Johnson who stated that he would not ask for an extension from the EU and that he would call for a general election if he is defeated in Parliament. This all brings further uncertainty on when/if Brexit will happen and how, and when combined with another gloomy report on U.K. manufacturing conditions, Sterling stood no chance this early in the week.
This brings me to my GBP/JPY idea that posted last week, where I started with a nibbler short at 129.70 as the market was finding resistance at the Fibonacci retracement area. Thanks to the Brexit drama (and with a little bit of help from the new U.S.-China tariffs to bring in fresh risk aversion sentiment), Guppy easily fell two handles to hit my max target at 127.00, where my trade closed.
Total: +270 pips / +0.375% gain on 0.50% risk taken
Looking back, I could have maximized the profit on this trade further by adding to the position on the break of the rising lows. But I hesitated on making that move as I didn’t think the momentum would take it all the way to max profit so soon. But fortunately, the market already bounced off of the major support around 127.00, so another short opportunity may come soon at the broken higher ‘lows’ pattern if bearish resistance forms.
What do you guys think? Should I look to short again if the broken support forms? Let me know in the comments section below!
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