The GBPJPY cross rate is considered to be a very insidious trading tool. Last year, it was very actively used in the so-called "carry trade" transactions. The tool is actively used for adventurous frauds. It can serve as a source of enrichment for those who are not afraid of a very big risk.
The proof of sufficient volatility of this currency pair can be, for example, a daily candle of August 17, 2007. The difference between the high and low that day was 968 points. The most interesting thing is that such a candle is not the only one. For a more recent example, take a look at the daily candle of March 18, 2008. Its height is 841 points. And again I emphasize the fact that she is not the only one.
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- As an average daily trading strategy for working with the GBPJPY currency pair, you can choose a positional trading strategy. To work with an instrument that has such aggressiveness, it is very important to choose significant price levels and take a comfortable position. Well, then time to get out of the market. Far from the last role in the process of opening middle positions is played by intuition. In addition to intuition, a set of MA indicators (moving averages) in combination with MACD can be a good help (especially if the instrument is in a strong trend movement).
- And now a little forex history. From November 1, 2007 to March 17, 2008, the instrument was in a downtrend from the level of 241.35 to 192.60 (the depth of the trend movement was 4875 points). From March 18, 2008 to the present, the instrument has been moving in the price range from 192.60 to 216.03. The thickness of the price range is 2343 points. On July 23, 2008, the instrument reached the upper limit of the range, rebounded from it and is currently moving down. It should be noted that the price has overcome about two-thirds of the range towards the lower border.
- Based on the above, two options can be outlined. The first option is to join the current downtrend with the aim of capturing the 500 pips remaining to the lower end of the price range the instrument is currently moving within. The second option is to wait for the end of the current downtrend, and in the presence of signals confirming the price reversal from the lower border (support line 192, 60), take a long position.
The advantage of the first option is that it is possible to capture the end of a strong trend and, possibly, part of the momentum in case of a possible breakout of the support line. The disadvantage is an attempt to jump into a steam locomotive rushing at full speed at the last station with all the consequences.
Among the advantages of the second scenario, one should note the conservatism of the wait-and-see position and the expectation of an opportunity to capture a new movement directly at the pivot point. Among the shortcomings, one can note the same conservatism in case the price breaks through the support line and continues to move down.
In any case, the choice is yours!
Warning - the article is for informational purposes and does not contain recommendations for opening trading positions.