28 Oct GBP JPY Long Position Taken for Gap Fill
It’s not technically a swing trade, just a trade based on probabilities.
Previous GBP:JPY analysis suggested there would likely be some upside and as that upside is now in progress I’ve decided to take a position with a view to those upside targets being achieved.
My long position was taken based on this hourly chart where a break beyond resistance took place earlier in the Week and price came back to retest that area as support throughout today. The position was taken on the second test at 121.95 as depicted by the red circle in this chart:
If it were a day trade stops would have been placed just below this support, or maybe to manually close the position on a 4 hourly candle close below this support, however, I’m running wide stops due to the upside potential to at least close the gap and test the falling (orange) 100MA as shown in this daily chart:
The Weekly chart doesn’t give many clues. Although the main Weekly trend is down, with little news action at the moment that is likely to massively affect this pair, a natural retrace could continue as far as 130.00 which is 800 points above the current print. If any of the BOJ intervention rumours come true, we could see a huge move to this level within days. Ok, that’s very speculative, but it’s never a bad thing to be on the right side of the trade were such rumours to become reality.
I’ll most likely manage this trade on a day to day basis adjusting stops if necessary or even closing the position if sentiment suddenly becomes very bearish, but in the meantime, with that unfilled gap 120 points away from the current price area, there lies some fair probability of a little upside and a few pips to bank.
If this type of long entry is not for you, then a retest of the down channel trend line could hold potential for a low risk future long entry.