GBPJPY – the real chart to watch around the Brexit negotiations
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Trade set up - Enter only on a daily close above key horizontal resistance at 149.31, targeting longer-term price resistance around 155.00. Stops to cover on a daily close below 147.19.
Why we like this trade – Monday’s daily bearish engulfing candle confirms strong resistance and a willingness to fade moves into the 149 – 150 area, so tactically waiting for the price to close through this supply zone would give a powerful message that GBP bulls have a clear edge. As it stands, price is consolidating in a short-term sidewards move, where we see buyers supporting the former break of the longer-term downtrend drawn from the February high. So, the view is to wait for the market to dictate a trade, and that means putting this pair on high-watch.
There is also a potential inverse 'head and shoulders' pattern also in play, where, should it complete, could see price move into the 100% price extension. Again, this becomes a higher probability outcome once price can close above key the ceiling that has contained all rallies since July. A closing break above 149.31 would confirm a new uptrend with a bullish outlook on the pound.
Fundamentally, being long the GBP does come with elevated risk as we are beholden to headlines around the Brexit negotiations, and as we come into a tense period of talks ahead of the 18 October EU Summit, these risks suggest keeping position sizing to a minimal.
Disclaimer.
Trading leveraged products carries a high level of risk and may result in you losing substantially more than your initial investment. Pepperstone Group Limited is licensed and regulated by the Australian Securities and Investments Commission (AFSL 414530). Pepperstone Limited is authorised and regulated by the United Kingdom Financial Conduct Authority (FRN 684312). This information not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation
Why we like this trade – Monday’s daily bearish engulfing candle confirms strong resistance and a willingness to fade moves into the 149 – 150 area, so tactically waiting for the price to close through this supply zone would give a powerful message that GBP bulls have a clear edge. As it stands, price is consolidating in a short-term sidewards move, where we see buyers supporting the former break of the longer-term downtrend drawn from the February high. So, the view is to wait for the market to dictate a trade, and that means putting this pair on high-watch.
There is also a potential inverse 'head and shoulders' pattern also in play, where, should it complete, could see price move into the 100% price extension. Again, this becomes a higher probability outcome once price can close above key the ceiling that has contained all rallies since July. A closing break above 149.31 would confirm a new uptrend with a bullish outlook on the pound.
Fundamentally, being long the GBP does come with elevated risk as we are beholden to headlines around the Brexit negotiations, and as we come into a tense period of talks ahead of the 18 October EU Summit, these risks suggest keeping position sizing to a minimal.
Disclaimer.
Trading leveraged products carries a high level of risk and may result in you losing substantially more than your initial investment. Pepperstone Group Limited is licensed and regulated by the Australian Securities and Investments Commission (AFSL 414530). Pepperstone Limited is authorised and regulated by the United Kingdom Financial Conduct Authority (FRN 684312). This information not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation
Note
Bears hold firm with price breaking lower. Key support levels at 50EMA, around 145.00 -146.00.
Global risk Warning CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading in CFDs. You should consider whether you understand how CFD
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