Just when I thought I had another perfect entry, my fortunes changed quickly as the forex gods were not on my side. We saw a drop in pound pairs right before the London session yesterday, and eventually, I got stopped out. To be honest, I thought we would see a steep drop, as the trend line was broken.
However, the price soon reversed and popped back up to the weekly open (WO)! Talk about tough luck!
Stopped out at 122.80: -65 pips/ -0.50%.
It seems to me that most pairs are remaining range-bound right now and I think there are two reasons for this.
First, we’re entering the summer season and volatility tends to die down this time of the year.
Second, with the Greek elections just around the corner, I think some traders are just plain hesitant to put on any positions right now and want to wait for more definitive news before acting.
In any case, I’m glad I scaled back my risk on this trade and risked just 0.50% of my account.
For now, time to take a chill pill and see what happens in Greece. I’m sure next week will be an action-packed one!
See y’all on the other side of the weekend!
Trade Idea: 13-06-2012 04:05
The pound has been very resilient against the yen as of late – even with the release of weak U.K. data – and I think I know why!
For one, risk aversion seems to be petering out at the moment, giving the pound and higher-yielding currencies a much-needed boost against safe-haven currencies.Secondly, the yen has been under attack as of late, as the Bank of Japan has already approached the G7 and the IMF for support in its campaign against the yen’s rally. I think this is the sort of development that could bog down the market’s appetite for the yen for a while, so I’m taking this opportunity to sell it against the pound.
But to be honest, the technical aspect of this trade is what really caught my eye. GBP/JPY has been on a rampage ever since it bottomed out at 119.00, and over the past couple of weeks, it has formed a slick little rising trend line.
My plan is to catch this pair on its way up as it hits the sweet spot where the rising trend line and the weekly open (WO) meet.
Buy GBP/JPY at 123.45, stop loss at 122.80, profit target at 125.00.
I’m setting my stop loss just below 123.00, since a break of this level would entail a break of the rising trend line (and would invalidate my trade idea). Meanwhile, I’m setting my eye on the top WATR at around 125.00 for my profit target.
What I like most about this trade is that there’s plenty of room for adjustments. For instance, if the move up is strong enough, I may add to my position at the break of resistance at 124.00. Heck, I may even set my profit target higher and hold the trade longer if we see a really solid bull run!
But take note, I’m not going all-in with this trade; I’m still gonna keep my risk in check and will only be putting 0.50% of my account on the line.
So what do you think, fellas? Are you with me on this one?
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