Simple's Green Room

[strongtower]

New Trade Alert: Sell GBP/JPY

The GBP/JPY has rallied since completing the bullish 30min Gartley/butterfly pattern hybrid highlighted on Monday's technical feature, and has now completed a solid bearish 2hr Gartley just below 146.0. This presents an ideal selling opportunity as the overall trend seems to be bearish, and even more so because the risk/reward is rather favorable. Of course, there's always the possibility of being wrong so stops are crucial because if we see a close above the 146.0 handle chances are a potentially strong bullish continuation move may be in progress so we'll want to make sure to cut our losses quickly. Should this occur, we would look for prices to extend up to the 127.2%-161.8% of XA near 150.0-153.0, respectively.
In terms of profit targets--assuming the current top near 146.0 holds and prices start to drop--the initial target of 144.11 (T1) is set just above the 38.2% retracement/correction of CD at which point stops will be moved to break even. The secondary target of 143.10 is just above the 61.8% retracement of CD and serves as the primary target considering overall trend. As always, we want to trade what we see and not what we believe, so if prices do drop as expected we'll want to take a quick glance at what price action looks like as we approach either target. If we see bullish patterns completing at either target, for example, we may consider taking profits at either target. Conversely, if we see signs of strength to the downside (gaps and/or long bars, for example) we may look to extend targets perhaps as far as 127.2%-161.8% of CD. Again, it all depends on how price unfolds so we'll cross that bridge when/if we come to it. As it stands now, we're short the GBP/JPY from 145.41 with stops at 146.12 and targets at 144.11 (T1, stop to b/e), 143.10 (T2).