Best GBP JPY Foreign Currency Trading Strategy & Technical Analysis

In this trade, I’m looking at the GBP/JPY pair. With the UK voting on whether or not to stay in the EU coming up shortly, there is a lot of volatility in the British pound overall. There’s a bit of negativity due to the fact that a lot of the exit polls are starting to show that the British may actually leave, and of course the Japanese yen represents one of the safest currencies in the Forex markets. At this point in time, I can’t think of a better divergence of attitude.

Because of this, I believe that the longer-term trend should continue to go lower and when I look at the 4 hour chart I can see that we formed a shooting star at roughly 151.20, and as a result I will use 151.30 as a stop loss. After all, we have broken down below the bottom the shooting star which is a very negative sign, and with that I believe that the longer-term downtrend will continue. 150 could cause a little bit of noise, but we have run below there before so I feel that the market should break down below there. At the beginning, I had no take profit, simply because it’s with the longer-term trend and I think we could really start to move.

When I woke up the next day, you can see that we fell apart quite drastically, and we’ve made a massive move lower. We are getting ready to make a fresh, new low on the charts, and looking at the weekly chart I think that we will probably try to target the 145 handle although there is a bit of noise just below here. Because of this, I then drag the stop loss down to the 148.15 level, as it is protected by a large round number, and of course lots in some profit behind the previous noise.

I think there will probably be a bounce ready for the 145 handle, so a place a take profit target at the 145.20 level as hopefully we can get our take profit level hit before we get any type of significant bounce, especially looking at the weekly chart which seems to show quite a bit of noise down there.

A couple of hours later I had unfortunately missed the take profit target by a mere 14 pips, which is almost nothing in this pair. This happens sometimes, and as a result you have to be able to take these types of setbacks with a grain of salt. After all, we made quite a bit of money in this pair, and profited roughly 300 pips. As we have bounce so significantly, it’s time to take profit especially considering that there is so much in the way of headline risk due to the fact that this is all based upon polling data at this point. With this type of snapback, normally there is a little bit of follow-through so therefore I am willing to take my profits and enjoy what has happened. Not a bad trade at all, and was still a multi-handle move.