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, we looked at a relatively young bullish trend-channel forming in GBP/JPY. As we discussed, both and had the potential for strong reversals of prior macro themes that could, potentially, continue pushing the pair higher as bearish bets on GBP covered while fresh Yen-selling took place in anticipation of another move from the Bank of Japan. At the time of writing for our last article, GBP/JPY had just run into a confluent zone of resistance between 135.48-135.72; and while this offered a brief pause on the bullish move higher, demand eventually drove price action to fresh highs as price action continued to trade within the bullish channel (shown below).
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Traders looking to get long on GBP/JPY can base risk levels on tolerance and aggressiveness, with each of the above support levels as potential areas for stop placement. For those wanting to give the trade maximum amount of room ‘to work,’ the Brexit swing low at 133.20 is especially attractive, and while 240 pips of risk on a trend-entry may not be all that desirable, the 300+ pips up to the prior swing-high could allow for a better than 1-to-1 risk-reward ratio.
For those wanting to treat the position a bit more aggressively, the major psychological level at 135 could be an attractive area to look to wedge stops below.