Hello FX friends! It’s been a while since my last forex trade. But don’t worry since I already have a good one for you to start the week. Today, I’ll be looking to short the Sterling pound against the Japanese yen.
As you can see from the GBPJPY‘s 4 hour chart, the pair fell to low of 124.78 before rallying again towards the 128.00 level. Now, what’s nice about this one is that the 127.50-128.00 area happens to fall in line with the 50% Fibonacci retracement level of the last down wave. Moreover, trading conditions actually turned overbought at the time the GBPJPY rose to the mentioned price area. Furthermore, the appearance of a hidden bearish divergence, where the price makes lower highs while the stochastics registers higher highs, suggest a possible downturn soon. So with the stochastics still far from being oversold at present and given the overall downtrend of the GBPJPY pair, I believe that the pair could continue moving lower.
So what I will do now is to short the GBPJPY at present level (127.64) and place my target profit level at 126.00 and my stop loss trigger just above the 61.8% Fibonacci retracement level at 128.75.
I’ll keep you posted on how this trade pans out. Wish me luck!