We may have a beautiful opportunity taking shape on a cross pair. Let’s talk about how to trade the GBP/JPY. For the Great British Pound and the Japanese Yen cross pair, our clients take advantage of our Banker Trades Strategy. Most retail traders shy away from trading the cross pairings. The spreads are often wider and they can be more volatile than the majors making it harder to predict price movements. We have reduced this level of uncertainty by bringing you what we have called Banker trades.
A banker trades involves trading in the cross pairings i.e. currencies not paired against the USD. As we always look for confirmed entry points in the market, we trade the cross pairings when the opportunity arises. This is a confirmed entry point. Take in the region of 1200 PIPs per year with such entry points. If you would like to learn more about this Forex trading strategy click here.
Fundamentals – How to trade the GBP/JPY cross pair
Now back to the subject, for Sterling, we just need to refer to our blog article Trading the Great British Pound and will have an idea of what to expect from that particular currency.
For the Japanese Yen, which is the other part of this cross pair, we all know, or at least should know, the important role of that currency. The Yen, as it is often referred to in the trading world, is a safe haven currency. That means traders and investors have a belief that this particular currency is stable enough to keep its value if compared to other currencies in times of uncertainty, inflation and any other forms of crisis.
The North Korea impact
Talking about uncertain times, we could easily classify “right now” as this kind of environment. You must have heard countless times in the news about the volatility between the United States and North Korea. There is a possible conflict on the horizon between these two countries. As sad as it may be, there are two ways you can look at this. One you can do nothing and lament about the world, its wars and current situation or two, you can actually use that knowledge to make some extra profits.
Since North Korea has shown no intention to hear anyone insisting in its continued nuclear program and with Trump in power in the US, that conflict is looming. Plus the US Dollar which is so weak and with no hopes for any strength to pick up in the near future, Selling Sterling and Buying the Japanese Yen would be a good proposal.
That is exactly what Platinum Traders plan to do if and when this trade comes into play.
Technical Analysis – GBP/JPY Trade Opportunity
From the chart on the left we can see GBP/JPY has rejected the top of the Ascending Triangle and has now breached the ascending trending line. All Platinum traders know exactly what to do on a breakout like that. BPC on it!! We will favour short positions on a pull back to 144.20 as another retest of the Trending Line. As for the fundamentals, the Japanese Yen is very Bullish due to its safe haven
status and the Pound is entering a possible reversal Head & Shoulders against the US Dollar.
We believe that both the pull backs on the Yen and Cable will be the perfect match with this level and a perfect trade could potentially come into play.
How to trade the GBP/JPY
The entry happens to be also a 38.2% Fibonacci retracement if measured from the high of 147.75 to the low of 139.25. We suggest a stop loss of 100 pips on this trade set up with a potential gain of 800 pips. That is an astonishing 8/1 reward to risk.
We have also outlined the various major supply and demand areas on the chart which you should place alerts on.
A) Short the GBP/JPY @ 144.20 or the nearest zone with 100 pips stop loss and a target of 135.85
Key Buy and Sell Levels:
- 114.20 – Long Term Selling level
- 138.85 – Short Term Buying Level
- 135.85 – Long Term Buying Level
- 132.90 – Short Term Buying Level – Platinum’s Premium Fib level
- 129.25 – Short Term Buying Level
- 123.25 – Long Term Buying Level
Perfect Fundamentals + Perfect Technical Analysis + Perfect Logic + Perfect Risk Management = Perfect Trade
At Platinum, we teach all individuals from different walks of life to become a full-time trader or create a secondary revenue stream by trading part-time.
Learn how to trade Forex the Institutional Way. We educate our clients to think like Institutional Traders and not like Retail Traders. Trading in the same style is not only more profitable but also far less stressful for the retail trader. We want you to make your trading decisions based on confirmed entry points and be confident with each trade that you make.
Wishing you all the best.
The information you’ll find in this article is for educational purpose only. We make no promise or guarantee of income or earnings. Use your best judgement and perform due diligence before using the information in this article. Your success is still up to you. Nothing in this article is intended to be professional, legal, financial and/or accounting advice. Always seek competent advice from professionals in these matters. If you break the city or other local laws, we will not be held liable for any damages you incur.