Saturday, August 23, 2008

8-21 GBP/JPY

This set up is one I was watching as it was going into the new day on the 22nd. Chris had told us on PTC that he saw further weakness in gbp/jpy before it dropped and I was looking at capitalizing on a pull back. I had an initial short limit order at 203.84 around 18:00 GMT but did not get filled. Once it went into a small fractal, I removed the order. I had seen that that 204.40-50 area should offer a good trade. Previous support was seen at that level and I felt was strong as it had taken 2 days to break below (19-20th) and hold. Once I saw the drop of nearly 300 pips and then a rally going after the days high, I thought that this would offer a good opportunity. My reason for looking at 203.84 initially was that it was a 127R of the intraday swing aligning with 62% of the last daily swing. Knowing that many times the gbp likes to go into the main area of congestion and being in the Asian session, the next level at 204.53 had even more confluences. The trade paid 35 pips on the first hit and then fell to offer a good profit before retracing.