Heavy Selling is Expected in GBPJPY

GBPJPY Technical Analysis

We are initiating our GBPJPY technical strategy as a trade alert and not as part of our weekly update due to the market volatility at the time of this writing.

As the market is still digesting Mario Draghi’s weekend comments and a possible FX intervention by the Reserve Bank of New Zealand (RBNZ), GBPJPY has provided us with a technical entry on the weekly chart. We are aware of the net swap differentials but due its volatile nature we are not concerned holding this trade for 14 days.

GBPJPY Weekly Chart

Please click on the chart to enlarge:

GBPJPY Technical Strategy 25 August 2014

GBPJPY Weekly Chart

The weekly chart shows multiple re-tests of the bruised support (black line) where current levels provide a decent dip for reloading short positions in the market. We are uncomfortable with heavy stop loss orders, which is why we have exercised multiple time frames to determine the location of our protective stop loss order. Our bearish target for the expected reversal is 169.60.

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GBPJPY Trade Details

short @ market price
Take profit: 169.60
Protective stop: 173.25
Estimated duration: 14 days
Risk Ratio (RR): 1 : 3 (approx.)

26/08/14 UPDATE: The trade was in approximately +30 pips profit before reversing the losses to our entry. Our bearish outlook for GBPJPY has not been negated.

26/08/14 UPDATE II: GBPJPY is trading at 172.17 at the time of this writing.  We are closing 10% of the short trade at market price.

28/08/14 UPDATE: GBPJPY is trading at 171.77 at the time of this writing. We are closing 25% of the short trade at market price and shift the protective stop to the entry.

29/08/14 UPDATE: GBPJPY triggered our protective stop at the entry. We have ended the trade, realizing 35% of the open position with a fair profit.

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Last Updated on January 1, 2015