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Long

GBPJPY - Channel being stressed - Longs Possible

FX:GBPJPY   British Pound/Japanese Yen
902 38 12
Greetings Fellow Traders,

Trade opportunities are always popping up left and right! Today we're going to look at a critical level for the GBPJPY             pair. We had an excellent trade off of 169.00 and an excellent trade near 165.00...and now we find the market on the resistance level pushing price down....

Sells will dominate as long as this line holds, however should we get a 4 hour close above, look for some consolidation or a retest back to the level that was broken and quite possibly an outstanding entry to a trade back into the 170s.

Let's make some pips!

Comment/Like/Follow - If you ever need assistance with trading or anything else, feel free to PM me as well.
Comment:
GBPJPY - Bullish Strength Amped to Continue
Updated Analysis for new trade entries
Do you think it's likely to break through with such a large down trend? Are you assuming it will break through because of the large bullish engulfing (2 candles back)? I'm a newby...just trying to understand, thanks.
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Synapse elirobinson
The channel is present, which means you have great selling opportunities right along side it. However should it break, candle close outside on the 4 hour. I'll look for buy entries again as we get close to what was broken. There is no buying opportunity until that happens. This post is more/less to make you aware of the trade should that happen. Until that happens though, sellers will prevail.
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Everyone was a noob or noobette at some point. There are no stupid questions.
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Cool thanks. How long have you been trading for?
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Synapse elirobinson
8 years, Self Taught
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Wow, that's awesome. I'm only a few months seriously. I hope one day I can make Forex a full time living.
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If it does break through and retests, does it have any relevance that preceding bulling candle? I mean does it give you any extra confirmation or it's irrelevant at that point?
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elirobinson elirobinson
Sorry, I meant the long bullish engulfing candle that preceded.
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Synapse elirobinson
Not in particular, price action that occurs inside the channel should be expected to defend the structure until it is broken. The large bullish engulfing on the 4 hour COULD have changed the look of the daily or weekly candles however.
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okay
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so when it break from the channel, we wait for it to pull back as indicated in your small down arrow in the chart and take a position, is that right?
I tend to buy sometimes upon breaking out and suffer consequences of pull back hours later as it continues to flush down into the channel.
What did i do wrong ?
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Synapse dchua1969
Hi dchua1969! Great Question. First and foremost, until the structure (the channel in this case) is broken, sells will have the advantage over longs near the top, and vice versa at the bottom. Essentially as you described is how I approach my entries. To answer your second question though, you may not have done anything wrong besides tying yourself to your take profit level. The market is ever evolving, the sentiment leading into a break could change a few hours later with something else...sometimes this causes price to crash back beneath a level. We saw this happen twice this week on NZDUSD Daily charts...we spent a large portion of the day outside of 2 different key levels, and then before the candle closed we were back within our identified structure.
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When a breakout occurs, it is expected (to some extent) to actually live up to it's initial strength...if it breaks that strength, its a sign of weakness for that direction, and many times this leads to the breakout fizzling out.
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You don't know the strength off hand usually...it takes time to form. I'll show you a chart of USDCAD from the last few weeks, 4 hour chart. We had a bullish flag breakout, great entry and visibility, but we had several levels that the market was gauging as buying power until we finally settled on the one that lasted til today's huge sell off.
snapshot
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This is great example. Thanks for sharing. I think I would have panicked and closed position after seeing a close and a bunch of retests to the upper orange line. How did you know to wait until the blue line, which at the time didn't even form yet?
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Synapse elirobinson
Many factors elirobinson. To be perfectly honest, the hardest thing about trading should be the initial wait after you enter a position to see if you identified everything correctly. First and foremost, like this GBPJPY trade initial drawdown was kept to an absolute minimum and we proceeded to trend almost immediately. There are so many ways to do this, but one of the best that keeps you profitable and get the most out of the market has to do with a combination between money and risk management. We identified the break, we identified the strength, when this strength breaks...close 80% of your position. With the remaining 20% of your position, set your stop loss to break even (in most cases) and continue to wait. Worst case scenario you realized 80% of your move. Best case scenario, the market pulls back to it's real trend strength and starts trending. You continue to hold the position catching the rest of the trend with your remaining 20%. To help illustrate my point and also compare the current breakout, here is the GBPJPY hourly chart.
snapshot
It's a lot easier for me to 'say' these things than it is to actually practice them, sometimes you almost need someone to walk you through the steps and how to psychologically manage a trade. I love these questions guys/girls, keep them coming.
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If you're someone that wants to just pull 100% of his trade off the table when he's entirely in profit, that's completely fine, however...if you do that, it is now your own self management to refrain from hopping back into the market just because it keeps going up. You should only be entering the market at places that make a lot of sense. This minimizes risk and maximizes growth. What I mean by this comparing it to GBPJPY is a buy at 168.00 is very different than a buy at 169.35(current market price now). We had very good reasons to enter around 168, but if you use the same reason at 169.35...you're adding an additional 135 pips of risk potential for no reason other than no self control. What if a surprise reversal ends up happening? You've completely negated any gains you had with the initial trade by spontaneously entering the market. There should be no fear of missing out with trading markets. There are hundreds of opportunities every week.
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Excellent! Thank you.
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dchua1969 Synapse
there are so many forex pair and can be confusing to a newbie like me. Some experts say focus on major while others swear by exotic pairs and their advanced trading strategy. Also, when I open CAD/JPY, GBP/JPY and others yen pair , the charts look pretty much the same. So how does one decide on which to choose?
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Synapse dchua1969
Another great question. Honestly it should come down to YOU. Every pair has the same technical analysis to me, some move more quickly than others, some have pip values that are worth more per pip, some might just be subjectively 'strange' to you. I will trade just about anything that has a good looking chart. I personally tend to stay away from CHF pairs, but this has everything to do with my broker's margin requirements surrounding them. The past couple weeks I've avoided trading EURUSD because almost every day for the last 2 weeks we've had trading outside of key levels but no confirmed breakout (in BOTH directions) this is very choppy behavior and I can find better looking setups on other pairs (even EUR based pairs like EURAUD EURCAD and EURNZD). So back to the question at hand, find something that fits YOU as a trader, if you like the currencies that move a lot see if they fit you, if you like to stick with 'the major's by all means. Maybe you really like your oceanic (AUD and NZD pairs) or YEN.
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Yen based pairs are all going to look somewhat similar, the differences are going to be in what the crosses attached are doing to them. Correlation does not equal Causation. If USDJPY is about to break a key technical level, that doesn't mean that GBPJPY, EURJPY and CADJPY are going to as well. If I was looking at all JPY pairs and trying to decide which to trade, I would trade that one that looks the best to me personally, has the best looking chart.
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It boils down to personal choice, and your own personal comfort level. The only thing I urge is if you follow exotic pairs, be aware of the higher volatility. NZDUSD can move 150 pips, but GBPNZD can move 500 off the same move. Many new traders learn painful money management lessons tunnel visioning themselves into raw pip gains.
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Price break out taking place. waiting for retest :) Thanks Synapse
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this retest thing ? how does it work ? what if it shoot straight up to 170 or higher ?
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forexmech dchua1969
Yes that is possible. However, you can use a Buy stop order to get in the trade.
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Synapse dchua1969
Retests happening in many ways shapes and forms. Sometimes they overextend, sometimes they look picture perfect, sometimes they barely touch because it's a very aggressive move. In GBPJPY's case we have the aggressive one for the moment. We barely came back to the horizontal level that the market reached during the first 4 hours of trading. If we shoot straight up to 170 or higher, just let the market go, keep this trade in your mind, but don't trade it yet. Look at GBPCAD a key break of the 2.0330 level and the market never looked back before it hit and exceeded my take profits at 2.08+. A few days later we found ourselves bouncing off of that level...
snapshot
What I'm trying to convey is that there isn't a black and white answer to this question, because every scenario is a little bit different. If there was a rigid set of rules, I could make everyone a millionaire in less than a month.
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If you want me to trade for you that's a discussion to be held in private. I personally would like to see everyone here become as successful as they can possibly be with what they apparently have an interest in. There's very few reasons why you'd find yourself here on this page without having an interest in this market.
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can I come back to 166 from 169 ?
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shahrose.ayankhan shahrose.ayankhan
it^
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Synapse shahrose.ayankhan
Anything is possible ZohaibMalik, however at this point I would think that is incredibly unlikely for the time being.
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I see you have outlined the possibility of a pullback before the rally you are looking for. My idea for a bearish bat pattern (short-term) I posted yesterday supports this pullback. Let me know what you think.

GBPJPY bat pattern short
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Synapse olly_price
It's possible however I don't think it will happen in quite the way you have pictured here. The harmonic Bat Pattern relies on a Fibonacci retracement of 88.6% which you have outlined...however the market has already negated this bat pattern by posting a higher high. From my personal trading the bullish breakout strength is still intact and any pullback (even severely aggressive ones) I expect to be limited to the channel resistance that was broken. Your targets for the bat pattern would put us well inside the channel again, which shouldn't happen at this point in time. Ideally any pullback/retracement from here will end around 167.80-168.00.
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olly_price Synapse
Nice, thanks for the insight. Would you suggest to me that when analysing the hourly chart I also consult a higher time frame to see if there is any longer-term pictures that would either support or not support my idea?
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Synapse olly_price
I think you should always be looking at multiple time frames when considering trade opportunities. What is happening on the 5 minute time frame is very different than what is happening on the 1 hour time frame which is very different than what is happening on the daily/weekly. See the forest for the trees so to speak. If you can understand what the market is doing in general, you also better understand the risk calculation for any 'counter' trend moves.
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looking at your chart, it seems 170 is a resistance level as 15/1,25/1 and 26/1have reversed downtrend upon hitting this level.
i missed the 2nd entry at 167 and wonder should I wait for it to fall back to this level again or take a smaller position at around 168-169 to ride the trend.
the precise buy, profit and stop loss entry is what I want to learn as previous experiences had been less encouraging.
many thanks
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Synapse dchua1969
Thanks for the comment dchua1969, 170 does seem to have provided momentary stops for current price action. At this level of trading I do not have any recommendations for entering a buying opportunity, the best chance would have been in the 167s or at the very latest after that 4 hour candle closed near 167.80. I intentionally am not providing exact entries, what I am providing is the market structure and the intended direction should that structure collapse. I leave it up to the individual here as to how they trade that opportunity. I manage funds if you want me to trade for you. That being said, if you really want to get in on this move, the best chance for that right now will be looking for a pullback to near the 168 level now based on the redefined strength....however there are no guarantees that price WILL go back there. Personally there are opportunities arising on other pairs while this one is already being played out.
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Just whatever you do, don't think about this particular trade as a FOMO (Fear Of Missing Out) there are new opportunities almost daily on every pair. There is no need to always be in a trade.
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Synapse dchua1969
GBPJPY - Bullish Strength Amped to Continue
Updated Analysis for new trade entries
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