What’s interesting to me about this chart is that RSI never dropped below 30 into the oversold level. Yesterday’s candle is bullish. Here’s the daily chart:
I’ve also been in and out of GBPJPY several times this month. This pair can be like Mr. Toad’s Wild Ride which means potentially big profits but also potentially big losses if you don’t choose your entry points carefully and trade with a tight stop.
On the daily it’s in a large range of 139.70 to 163.09. It may be forming a smaller range within this one with a top of 147.48 to 153.25. I bought at 148.99. Yesterday it was up as high as 151.75 so I took some profits and left a smaller part of the trade on. The profit stop is at 100 pips so I can’t lose now regardless of what happens.
On the three hour chart you see that I bought as it left the bottom of the interim channel. I was a bit late on that buy which meant my stop had to be below the bottom of the channel (151 pips). That’s too wide for many people but I had signals from shorter time frames that hinted at a rally. In addition, the potential was great with a top at 153.25. Finally, with the wider stop I cut my position size to a third of what it normally is. Needless to say, I watched it carefully after the buy to see if I needed to pull the plug.
That could be a flag on the chart. If so, potential profits are the length of the flagpole or near 155. Well that would be nice. Not likely, but nice.
Here’s the 3-hour chart:
Before I leave this pair, look at the RSI on the daily chart. As the pair dropped it bounced off the .382 fib retracement indicating a shallow retracement in momentum. Nice confirmation of a good buy. Remember, though, that I didn’t have that signal when I bought. Here’s the daily: