I knew this perfectly neat trade setup was just too good to be true! Just when I thought bearish momentum was in play, Guppy made a break for it and hit my stop.
Short GBP/JPY Trade
This pair had been trending lower inside a descending channel on its 4-hour time frame and just completed a bounce off the top, which happened to line up with an area of interest.
I hopped in a short position after waiting for a bit of momentum, thinking that the pair was ready to head back to support. Stochastic was already heading south anyway, reflecting a return in selling pressure.
However, the Brexit frowns turned upside down as EU officials appeared to show more flexibility in ironing out a deal. Chief negotiator Barnier even sounded open to adjusting the deadline from October to November, signaling that they’re also not too giddy about a “no deal” outcome.
Although there were still a few negative updates here and there, pound traders seemed to pay closer attention to positive ones for the past few days. After all, these set a different mood from the earlier gloom and doom Brexit outlook.
To top it all off, risk sentiment improved on softer-than-expected tariffs from the U.S. and China, also suggesting that both parties aren’t inclined to stoke tensions further. With that, Guppy climbed all the way past the top of the channel to hit my stop past the 146.00 mark.
Here’s the damage:
P/L: -275 pips / -0.50%
In hindsight, I really should’ve tried to cut losses the moment Guppy started to close past the latest highs around 145.50. At that time, I still held on to hope that safe-haven yen demand could pick up on another round of trade and Brexit troubles.
Did you guys get caught up in any yen trades this week, too?
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