GBP JPY Long Position Taken for Gap Fill

GBP JPY Long Position Taken for Gap Fill

It’s not technically a swing trade, just a trade based on probabilities.

Previous GBP:JPY analysis suggested there would likely be some upside and as that upside is now in progress I’ve decided to take a position with a view to those upside targets being achieved.

My long position was taken based on this hourly chart where a break beyond resistance took place earlier in the Week and price came back to retest that area as support throughout today. The position was taken on the second test at 121.95 as depicted by the red circle in this chart:

 

If it were a day trade stops would have been placed just below this support, or maybe to manually close the position on a 4 hourly candle close below this support, however, I’m running wide stops due to the upside potential to at least close the gap and test the falling (orange) 100MA as shown in this daily chart:

 

The Weekly chart doesn’t give many clues. Although the main Weekly trend is down, with little news action at the moment that is likely to massively affect this pair, a natural retrace could continue as far as 130.00 which is 800 points above the current print. If any of the BOJ intervention rumours come true, we could see a huge move to this level within days. Ok, that’s very speculative, but it’s never a bad thing to be on the right side of the trade were such rumours to become reality.

 

I’ll most likely manage this trade on a day to day basis adjusting stops if necessary or even closing the position if sentiment suddenly becomes very bearish, but in the meantime, with that unfilled gap 120 points away from the current price area, there lies some fair probability of a little upside and a few pips to bank.

If this type of long entry is not for you, then a retest of the down channel trend line could hold potential for a low risk future long entry.

6 Comments
  • Weekly Swing Trading Round-Up
    Posted at 19:31h, 28 October

    […] second swing was taken today, a GBP:JPY long that for now is still hovering around the entry […]

  • RS2OOO
    Posted at 07:17h, 31 October

    BOJ intervened overnight – See BOJ intervention post from last week.

    All initial targets have been exceeded and I’ve closed half of this position for +435 points.

    Will see how things go over the next few hours before making a decision on the 2nd half.

  • ematrader
    Posted at 07:45h, 31 October

    Lovely trade that RS. I’ve been doing a bit of work on Daily/Weekly/Monthly cycles of late and I was commenting to a friend in the city last week that the USDJPY looks oversold on all three of the above time frames.

    What I would like to see now is a back test of the recent low over the coming weeks / months for a potential long term long position.

  • Weekly Swing Trading Round Up 4th November 2011
    Posted at 01:08h, 05 November

    […] only other real swing trade taken this week was a GBP:JPY long from 121.95 on Monday. I woke up Tuesday morning and BOJ had intervened in the FX market causing a 540 point […]

  • RS2OOO
    Posted at 00:35h, 09 November

    Added to the GBP:JPY long tonight – will monitor this closely as I want stops at breakeven as soon as possible.

  • RS2OOO
    Posted at 23:15h, 09 November

    The scaled in GBP:JPY long was stopped out for -100 points.

    The 2nd half of the original GBP:JPY long was stopped on a trailing stop for +211 points.