GBPJPY Update: +950 pips. What To Watch For. A Lesson In PA

FX:GBPJPY   British Pound / Japanese Yen
1244 2 31
Back on May 16th, 9 days ago, I posted this post suggesting that we were about to see a very BIG move up coming: "GBPJPY: Bats Dominate! The Power of Patterns! THOUSANDS of Pips!":
After I posted that, prices jumped over +450 pips.

Then on May 19th, 3 days later after prices jumped, I posted this: "GBPJPY Trades Update: +860 pips On 2 Trades. SUPERTREND Coming?" where I was predicting that this pair was still headed higher.
But shortly after I posted that, it DROPPED -340 pips after NEARLY completing a Bat pattern you see on the chart! While I did not expect that large of a drop, I told my members to NOT PANIC and to hold onto the LONG trades. Today, you see the results of NOT PANICKING and sticking to my plan. Not only has it quickly recovered from that drop, it has now gone even higher and is headed higher. The 2 trades I am in and my members are in are now up a combined over +950 pips (+3500 pips in actual trades).

This is a good lesson on why you should not panic and not let your emotions rule your trading. But I will also tell you what it is that I am watching for and how to read price action.

I am now watching for prices to reach up to a UPPER TL that has held prices a couple of times before. This TL will probably provide resistance again. When prices do reach that TL, it will be establishing a new HH (higher high). At this point, I will be watching the PA carefully and may take some profits. At this time, I will be watching the RSI . The RSI should not go higher than the previous high and will therefore make divergence. Because of this, I don't believe that prices will break through that TL yet but instead will bounce off of it and retrace back down in what I would consider to be the wave ii of (v). Probably down to hit an uptrend TL. And then we should see the wave iii             of (v) happen.

This is how you use the RSI and divergence to help read what is happening on the chart according to the price action.

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Please keep in mind that I am not giving any trading signals or trade calls here. Only providing my own trade thoughts for your benefit and insight as to my trading technique and style. Please don't ask if you should or should not take the trade or ask for stop loss and take profit levels. Any SL or TP given on my trades are my own I have used for my trade and are not recommendations for you to use. If you are not sure, then you do not have a trading plan for yourself in place. I suggest you make one before you continue to do any trading!

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