I do lots of Swing trades. GBPJPY pair is one of my favorite.
Looking at Daily chart, we noticed Bearish divergence on Stochastic. The price is still riding 21EMA. So typically I do not consider Short trade yet. However, I respect Divergences especially on longer timeframe, such as Daily chart. The price also made Lower High. That’s another reason why I look for Short trade.
Looking at H4 chart (below), the price is approaching the resistance. Since Stochastic is looking up, I suppose the price will go up from here. I would like to short this pair at the next down cycle of Stochastic IF THE PRICE MAKES LOWER-HIGH, that means if the price is less than 194.50. Stop Loss should be above the previous high. I would set it to 195.50. Yes, Stop Loss is -100 pips. Too much? Well, this is Swing Trade. -100 pips is typical for Swing. The target should be 184.40 (MM3 -> MM1). So we are talking about 1000 pips of the profit.
Risk/Reward ratio is 1:10.
Please just be careful about the lot size. Since SL is -100, please adjust your lot size accordingly.
This will be a trade for next week, and once we enter the trade, we should be in the trade for weeks.
Have a great weekend.
YJ Baik – Forex.Today @ Tokyo