The medium term daily candle chart below shows the price history of the Great British Pound (GBP) against the Japanese Yen (JPY), over the last 12 months, and currently trading at 168.72
Already underway in today's session, a 317 pip move to the downside had occurred, in the GBPJPY pair, after opening at 171.36 and moving to a low of 168.32 after reaching its high of 171.49, as a steep drop of the USD against both the GBP and JPY respectively - had also occurred and had a cumulative impact on the GBPJPY Cross (see more about crosses here).
The last time the pair was covered in this series was at the start of July 2013, and has since been under our radar for some time. According to the chart below, the support found today near the medium term bullish support line (point 5 in green on chart),could provide a reversal. whereas, if this line fails (point 5) and the short term bearish support (point 3 in magenta) provides a bearish continuation, then 166.00 could be the next step. A long term weekly chart is provided for a comparison with the longer term trends in GBPJPY.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 169.11 with a Limit to take profit @ 169.41 and a stop-loss @ 168.89 Risk/Reward Summary: Limit risk = +30 pips profit / (-22) Stop-loss risk = Gain to Loss ratio = 1.36
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 167.98 with a Limit to take profit @ 166.55 and a stop-loss @ 168.40 Risk/Reward Summary: Limit risk = +143 pips profit / (-42) stop-loss risk = Gain to Loss Ratio = 3.40
Medium Term View using Daily Candles:
Very Long Term Montly Candle Chart: