Entry Triggered:
Yesterday, we saw GBP/JPY test a very short-term bearish trendline that came down from last week's high of 174.22. (refer to the 4H chart below). We examined an entry at 173.25, with a stop at 173.55, and an initial target back to lows on the week near 172.50.
GBP/JPY - Trading the Short-term Falling Trendline...
Price came up to the 173.50 level and respect the 200-period SMA in the 4H chart. Then it retreated, and the decline was sharp, pushing below the 172.50 level.
Target Attained:
With the prevailing bearish momentum intact, and a general bearish mode since the 175.36 high from July, it was only following the mode of the market in making another low on the month. If you were able to allow GBP/JPY to fall further, the next support to look for would have been the 61.8% retracement at 171.76. (61.8% retracement of June's rally from 169.54 to 175.36)
Indeed we are seeing traders bid up the GBP/JPY after it checked the 61.8% retracement level. This is probably a good level to take profit, especially with the Bank of England monetary policy announcement coming up in the upcoming European session (8/7).
GBP/USD 4H Chart 8/6
Scaling Out:
Another idea would be to take profit but scaling out half the position, and possibly moving the stop for the other half position - we will call it a runner - to let's say 172.80. This move would ensure profit and a free trade with smaller risk, though smaller reward for the bearish continuation scenario.
Next Support:
In the bearish continuation scenario, the next support would be the 170.95-171 level, a support pivot from June 10. If the runner is able to survive some near-term volatility and reaches the 171 area, we can take profit on this 1/2 position.
Trade Safe, Trade Well.
Yesterday, we saw GBP/JPY test a very short-term bearish trendline that came down from last week's high of 174.22. (refer to the 4H chart below). We examined an entry at 173.25, with a stop at 173.55, and an initial target back to lows on the week near 172.50.
GBP/JPY - Trading the Short-term Falling Trendline...
Price came up to the 173.50 level and respect the 200-period SMA in the 4H chart. Then it retreated, and the decline was sharp, pushing below the 172.50 level.
Target Attained:
With the prevailing bearish momentum intact, and a general bearish mode since the 175.36 high from July, it was only following the mode of the market in making another low on the month. If you were able to allow GBP/JPY to fall further, the next support to look for would have been the 61.8% retracement at 171.76. (61.8% retracement of June's rally from 169.54 to 175.36)
Indeed we are seeing traders bid up the GBP/JPY after it checked the 61.8% retracement level. This is probably a good level to take profit, especially with the Bank of England monetary policy announcement coming up in the upcoming European session (8/7).
GBP/USD 4H Chart 8/6
Scaling Out:
Another idea would be to take profit but scaling out half the position, and possibly moving the stop for the other half position - we will call it a runner - to let's say 172.80. This move would ensure profit and a free trade with smaller risk, though smaller reward for the bearish continuation scenario.
Next Support:
In the bearish continuation scenario, the next support would be the 170.95-171 level, a support pivot from June 10. If the runner is able to survive some near-term volatility and reaches the 171 area, we can take profit on this 1/2 position.
Trade Safe, Trade Well.
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