GBPJPY: Double-top near December peak is within close range as pair is in steep bullish recovery
The daily candle chart below shows the medium term price history of the Great British Pound (GBP) versus the Japanese Yen (JPY). This currency pair is known as GBPJPY, and is trading near 187.83 around time of publication this Tuesday afternoon in New York.
Recent divergence of the British Pound - which strengthen against the US Dollar in recent days and coupled with the Japanese Yen weakening against the USD - has fueled the GBPJPY cross pair higher.
Last time GBPJPY was reviewed in Ideas You Can Trade , in early 2014, it was struggling to move higher but had since recovered towards the end of last year - with a high reached on December 5th just under 190.00.
That high of 189.68 is now within close range again (see purple dotted line on chart below) and GBPJPY may look to test that level - where resistance could exist before pushing higher.
However, even if that level is hit - such a bullish continuation could first be preceded by a pullback of the last 5 trading sessions which has lifted the pair from the May 7th low of 180.92 (such a pullback could find support on the bearish red trendline on chart below).
Below are examples of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 188.35 with a Limit to take profit @ 189.55 and a stop-loss @ 187.35 Risk/Reward Summary: Limit risk = 120 pips profit / (-100) Stop-loss risk = Gain to Loss ratio = 1.20
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 186.69 with a Limit to take profit @ 186.01 and a stop-loss @ 187.18 Risk/Reward Summary: Limit risk = 68 pips profit / (-49) stop-loss risk = Gain to Loss Ratio = 1.38
Medium Term Daily Candle Chart: