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Since today is Super Thursday for the BOE, I’ve got my one good eye locked on this classic pullback setup on Guppy. Think it’ll reach my entry area?

Short GBP/JPY Idea

I may have missed the head and shoulders neckline break that I was looking out for earlier this week, but I think I could still be able to catch a pullback to the broken neckline.

Using the handy-dandy Fib tool on the latest swing high and low on the 4-hour chart shows that the area of interest lines up with the 61.8% Fibonacci retracement level. To make this deal even sweeter, the potential resistance also coincides with a falling trend line and the 150.50 minor psychological mark!

GBP/JPY 4-hour Forex Chart
GBP/JPY 4-hour Forex Chart

Price seems to be bouncing off the nearest Fib, though, and stochastic is indicating that sellers are already piling in. However, the upcoming BOE decision could still spur a little more volatility for this pair, so I’m gonna sit on my hands for now.

Instead, I’ll stay patient and wait for a larger correction to the 150.00 levels, noting that the previous BOE announcement turned out more hawkish than expected. Market watchers appear to be pricing in a downbeat bias in this week’s statement and minutes, especially since recent U.K. reports have turned sour.

Then again, this opens the case for a profit-taking scenario during the actual event or potential disappointment for pound bears if the BOE maintains its upbeat tone. Either way, it could still lead to a pop higher for Guppy and a test of the higher resistance levels.

As for the yen, I’m keeping a bullish bias on the lower-yielding currency mainly on risk aversion stemming from geopolitical risks. Trump recently announced his decision to pull the U.S. out of the Iran deal and impose sanctions on the country, which could keep international tensions in play.

Here’s my plan:

Short GBP/JPY around 149.75 to 150.25, stop loss at 151.25, profit target at 147.25. I’ll be risking 0.5% of my account on this setup.

How about you guys? Any plans on trading the BOE Super Thursday?

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.