Price Action on GBP/JPY

GBP/JPY patience and timing

Tuesday 2 December 2008:

Yesterday, if you had jumped into the momentum breakout which we posted up about as it was breaking you might have stayed in for around 500 pips. In our team there are those who trade conservatively, who got 150+ pips, and others who trade with more risk, who stayed in for the 500 pips.

Today we haven't got a clear direction setting up yet on this pair, until we do we won't be going in.

Waiting for the right set up and the right timing is crucial if you want to be successful in trading. A lot of new traders overtrade, which means they eat up all their profits on impulsively taken trades which don't completely comply to their rules, they don't wait for their set up to develop sufficiently, or they don't hold on for the right timing. Patience seems a hard thing to put into practice, especially if you get the feeling you might be 'losing out'.

The good thing about feelings like these is that you can learn to convert them into useful new directions. Instead of feeling that you might be losing out, you could convert this feeling into a new one where you instead feel clever for recognising unfavourable trading conditions. The new feeling helps you master patience. Today, so far, is a day for patience.

If we get a break below 138.04 though, it might be an ideal sell if everything else looks okay.

GBP/JPY in a wedge again

Wednesday 3 December 2008:

Yesterday we managed a small sell trade after the support break we anticipated, just 70 pips. And subsequently a few more pips on a buy trade as the pair reversed. But price stayed within a narrow range and after the buy trade was over the pattern was too irregular to trade. This morning we have another ending triangle/wedge and price is likely to break out soon and give another good trend to trade.

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Yet another wedge on GBP/JPY

Well we got another ending wedge this morning before London Open on the GBP/JPY which is already breaking out. Yesterday we got 160 pips profit on the wedge breakout. Today we have to be careful about the strong support which saw 3 reversals yesterday. So it's a good idea to see what happens at support before entering a sell.

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GBP/JPY waiting for consolidation breakout

Yesterday we made a nice 200 pips on that wedge break I posted up about.

Today London Open started off with a narrow consolidation and we’re waiting for it to break yesterday’s 9.00 low to confirm the trend is still down. Consolidations like this are good to look out for, if we know the trend that preceeds the consolidation we can look for a breakout in the continuing direction. But if we get the breakout as a reversal (in this case reversal would be price breaking out above resistance) we should wait for confirmation of a new trend before going in.

Also today is NFP data day (the first Friday of each month) which means Non-Farm Payroll data, it is the most volatile data that is released, and it happens during the NY session. What that means is that we might get a hesitant market (like today) waiting for that data release (quite often when the market is in consolidation it is about traders waiting for some data). We should be cautious about getting whiplashed when the data comes out, especially NFP data. If you’re not already in a trade a couple of hours before NFP data release, wait till after the release and the dust to settle to enter.

The way to think about data releases is that most of the economic expectations are already factored into price movements, traders already have ideas about what they think of data in advance of it being released, and they are trading that, in fact the market has already factored in many micro and macro economic data that couldn’t possibly be listed on one site. The actual release of important data either confirms or changes what has already been factored in in traders’ minds - this means we don’t know how trader’s sentiments will change with any individual piece of data, but we can read how that shows up on the charts, which is the beauty of technical analysis. In technical analysis we are looking at effects, not causes - we never ask ‘why’ big price movements happen, we only trade the patterns they make. We don’t know how the market is going to react to ‘good’ news or ‘bad’ news, different traders will have different views on it, but we can read the charts for the patterns it creates and trade accordingly.

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