Trade Breakdown – GBPJPY Long February 2020

*Reviewing my current long positions on the GBPJPY FX currency pair and where it will go next*

In this blog post I am going to show the pre trade analysis and trade management for the multiple long positions I have entered on the GBPJPY FX currency pair this month. I will show you the price charts before and after each position was entered and tell you why I took the trade at those levels. I will finish with my future price predictions for the Pound.

Let’s start with the higher timeframe weekly price chart.

GBPJPY weekly timeframe chart

The weekly chart looks bullish to me. I have marked on the chart above, the key features of price action that gave me a bullish bias to enter long positions this month.

Price bounced off of the higher timeframe support zone at 127.00 last year which then lead in to a strong buying trend. Positive fundamentals for the Pound including Brexit finally going ahead and the conservative remaining in power assisted this.

Price is currently in a consolidation phase after it gained over 2000 pips in approximately 4 months. I believe this consolidation is going to break to the upside and the previous bullish momentum will continue to send the Pound on its way back to pre 2016 highs before the original Brexit referendum occurred.

Long position 1 @ 141.200

GBPJPY 4 hour timeframe chart
(long position 1 trade entry)

This is a very good example of a support zone trade. It could be considered an intraday or higher timeframe support zone but however you label it, the 141.200 support zone had been proving very strong in the weeks leading up to my trade entry.

As you can see on the chart above, there are at least 5 good price reactions to this zone before I entered a long trade on the 3rd February 2020. I entered long on the multiple wick rejections of this zone that formed. At the time of entering this trade position, the weekly consolidation was still forming and I was looking to get in at these lows in order to be ready to take advantage of the higher timeframe bullish momentum continuing.

With a profit target of 144.400 this gap the trade a potential reward of more than 6R. This level is the previous major intraday resistance zone but if the higher timeframe bullish momentum was to continue then this level could quite easily be broken. The next profit target is set at 147.800 which would produce a return of over 13R.

A stop-loss order set comfortably below the support zone and wick lows of the candles kept it safe from any more retests of this zone before the buyers came back in to the market.

Long position 2 @ 141.553

GBPJPY 4 hour timeframe chart
(long position 2 trade entry)

This trade entry was a trend continuation set up. After entering my first long position, price went up to make new higher highs on the intraday 4hr chart before beginning to retrace back down. Because this higher high was made, I was confident that the next low would form higher than my first trade entry.

I applied the fibonacci retracement tool to the last swing high and swing low points and waited for the next rejection to form. A bullish 4hr wick rejection candle formed above the 0.786 retracement level and 141.500 key level and I took this as a sign that the bullish trend was soon to continue.

Important! I got lucky with this trade. Price came back to within 5 pips of my original long trade entry which was now risk free at this point with the stop loss order placed at my trade entry price.

Remember, “luck” is an important skill to master when trading the financial markets but accurate trade entries with decent reward:risk ratios will always improve your chances of good luck.

GBPJPY 4 hour timeframe chart
(As at 19/02/2020)

As you can see on the chart above, price did form a higher low at my second trade entry and went on to retest and break the bearish trendline. New higher highs were made on Friday last week and I believe it is clear that this chart is now definitely bullish.

Future price predictions.

I am looking to hold these 2 long positions through to the profit taking targets shown on the chart above. I believe this is easily achievable in the next 2 weeks. I do not mind holding these trades for multiple weeks because the GBPJPY FX currency pair benefits from positive carry charges on long positions.

GBPJPY 4 hour timeframe chart
future price predictions

The chart above shows what might occur over the next few weeks. A break of the 141.500 resistance zone would be good because that should allow price to continue to make new higher highs.

GBPJPY daily timeframe chart
Long term profit targets

The chart above shows my long term view for the Pound vs Yen over the next few months/remainder of the year. There is a good chance that the breaking of this consolidation leads to another bull run that could take price up to highs of 155.00 or more. This is measured using the previous bull run of around 1400 pips (from 127.00 to 141.00) and then expanding that from this consolidation onwards.

Top Tip! There is no need to jump in to Pound long positions right away. There should be plenty of intraday trade opportunities in future that will allow you to get high reward:risk positions and then participate in the potential long term bull run.

If you are interested in learning more about the analysis techniques and trading strategy used in this trade breakdown blog post then please check out my Mastering the Markets – Retail Trading Course.

Useful Links:

All my technical analysis is done using the TradingView platform. You can get access via the link below.

https://tradingview.go2cloud.org/SH3bP

My preferred broker of choice is IC Markets. Low spreads and trading costs really help long term profitability. A link to their site is below.

https://www.icmarkets.com/?camp=38537

FTMO Trader Funding Programme.

https://ftmo.com/?affiliates=335

Thanks for reading and please don’t forget to LIKE, SHARE and FOLLOW my blog to stay up to date with the latest market analysis and trading education posts.

DISCLAIMER: None of the information posted on this site is to be considered investment/financial advice. Trading is high risk and you should only trade with money you can afford to lose.

%d bloggers like this:
search previous next tag category expand menu location phone mail time cart zoom edit close