FXWW News/GBP crosses/JPY crosses/Trade Ideas

GBP/JPY: Good risk-reward for the contrarian bears

Looking for extremely over-bought or over-sold conditions can be a very profitable exercise in the FX market. Of course there are plenty of false alarms but if you trade them properly, these signals can be very profitable.

Even though I’m a medium term GBP bull, the short-term signals are looking increasingly bearish but as yet we don’t know whether this means a period of consolidation or a retracement.

If it’s ‘bang-for-your-buck’ that you’re after, then GBP/JPY might be a good choice. It’s risen almost vertically at times and if/when it turns south, the move is likely to be similarly sharp. Selling near present levels at 167.50 with stops above 168.50 and a target at 164.00 looks like a reasonable proposition to me.

  1. Good morning Alex. Primarily its experience, combining my reading of price-action and overall market positioning. Chart-wise, I don’t put a lot of faith in arbitrary mathematical calculations of o/b and o/s conditions. I prefer to look at the steepness of the move, whether it’s stalled at an important chart point, and whether the s/t charts are showing any signs of reversal. Put all this together.

  2. @fxgai.
    I have been doing the same :). I just really don’t understand this market. Why is the eur holding and why is the chf gaining. While commodities are losing and spx is rallying.

  3. No idea why EUR is lifted like this when all fundamentals are against it. If Draghi fails to deliver today, it may hit 1.383 again. Sean, do you have any reasons for EUR strength, based on your experience?

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