Trade Closed: 2011-11-03 22:01
We saw a wave of risk appetite during the London session as word broke out that George Papandreou was losing support and that Greece would abandon its call for a referendum. This boosted higher-yielding currencies like the pound, which in turn helped my trade out!
The 124.00 MaPs held like a boss as price was just chillin’ above the support area before the news came out. My profit target was hit a couple hours later. Looking back, it seems like I picked an optimal profit target as price hasn’t moved much higher than 125.00.
Long GBP/JPY closed at 125.00 : +80 pips / +1.18%
It was a nice setup, and I think I made the right decision to not set an ambitious profit target. I think that with the current environment, it may be better to stick with day trades and go for smaller profit targets.
Feels good to start the month off with a win! Congratulations to those of you who joined me on this trade! Enjoy your weekend!
Trade Idea: 2011-11-03 01:45
It looks like we’ve got the green light to buy GBP/JPY, at least as far as technicals are concerned. We have the 61.8% Fibonacci retracement level overlapping with the 124.00 major psychological handle. Aside from that, Stochastic is already signaling overselling and showing a bullish divergence from price. And as for the icing on the cake, we have confirmation from candlesticks in the form of the recently completed morning star pattern. Boo yeah!
As for fundamentals, I think that there’s a really good chance that we’ll see the pound rebound soon. The markets have been in risk-off mode for a while now, and I think now’s as good a time as any for it to recover. After all, the pound already showed signs of its resilience against the dollar yesterday.
Aside from that, with the Bank of Japan closely watching the yen’s price action, I think the upside potential for the yen is limited.
So here’s how I set up my trade:
Long GBP/JPY at market (124.20), stop loss at 123.70, profit target at 125.00.
I decided to use a tight stop of just 50 pips because I think that if the 124.00 handle gives way, GBP/JPY could very well keep falling. Also, I wasn’t too ambitious with my profit target, considering that the pair has been making lower highs, so I set it right at the 125.00 major psychological handle. Lastly, I only risked 0.75% on this trade since it sort of works against the grain of risk sentiment.
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