GBP/JPY: Winning Strategies

Trading Discussion Currencies
100

OK, I explained it below and I got it from the Alternative Technical Strategies thread, which is also posted below as a link. Reading through that thread will explain how it works.

Basically it is just really simple … put up a 4h chart and remove all indicators … all of them :smiley:
then zoom out and start drawing your own s/r lines … you’ll end up with 8-14 of them usually.
That’s it … that’s the chart they use.

You are forced to follow price action only, using candle shape, and to watch price action around the s/r levels. They don’t even use trendlines…

When I see an interesting setup on the 4h I put a colored rectangle or ellipse behind it, then zoom in to the 1 hour, then to the 15 min to see details of what is happening.

A great example is here:
http://forums.babypips.com/free-forex-trading-systems/6632-alternative-technical-templates.html#post61898
from the ATS thread, Tess posted these charts for me as she knows I follow the guppy. Follow along on a chart on your own computer … she was showing the place to short the guppy according to this system.
I did not take the guppy short because I don’t like shorting her but also because at that time I was not yet familiar with this sytem … and my other charts did not show the setup so clearly.

However last night I saw a similar setup on the G-Swissy and took the short which is well into profit now … see if you can find it.

What I like about this is you are forced to forget all the conflicting stories told by numerous indicators and must just focus on price alone.

However on my charts I add in weekly and monthly pivots and s/r levels which usually end up overlapping with most of mine (I draw mine first) but Tess & Jo do not even use those. I also have an indicator that marks the turning points of a trend, but only correctly after the fact so it is used as an early warning sign that a trend “might” be finishing.

Amazingly they do not use fiboncci levels either! I still draw those in occasionally. Probably because these are props I still need whereas they are confident of their ability to draw in the s/r lines and to interpret the price action around them.

Now if people are accomplished using more complicated charts, or have a chart setup that works for them, then don’t fix what ain’t broke! This is just a good way for new traders to get started (I am testing it with my daughter) and for those who are experienced but suffering from “indicator overload”.

If your charts are loaded with indicators and you are still looking for more, but your trades are not working out that well … maybe give this a try :cool:

101

According to my chart the best position for the guppy is flat, flat. A light is blinking “stay away” and has been for awhile.

My trend-changing arrow, pointing up, first appeared several days ago and just keeps moving down with price (that is why it is an after-the-fact indicator, but useful in at least it is saying “at some point, this trend has gotta change!”) Duh.

The chart Tess posted for me (link to thread in post below) shows a ‘strong’ support level at 208 which would match the one on July 16. So price may just drift down to this level before it decides to go back north.

Only the Shadow knows for sure…

Those who have other technical strategies for trading our guppy gal, please keep sharing what you do. The thread is called Winning Strategies and just because I am such a chatterbox doesn’t mean I want to focus on only one way of trading her … the object of the game is to figure out what works best for this ellusive pair … we need many great minds to do that :smiley:

102

She is hanging out around the 208.50 level and I have a feeling she has come this far, she will at least try to tag the 208 mark before heading back up. I will wait there and get one teensy position and only add to if she really shows strength and determination.

I have a feeling … and probably dead wrong (as usual) but … this northward retracement may not last long. She may be in early stages of another major down move. In my demo account, I will be cashing out all positions, even losing ones at her next swing high, which I hope I’ll be able to spot. It may not be above 210.50, and the next trip south could take her to Brazil … for the winter?

103

Thanks 4x Star. I really appreciate your help ( and patience). As far as SHE is concerned, I am truly glad I have been in a demo account with her. This would not be near as much fun if it were MY money hanging by a thread.:smiley: Thanks again.:slight_smile: Jerry

104

I know everyone reading here browses Elijah’s thread as well, but thought I’d reproduce these notes here, just for some general technical frameworking:

A few items to look at:

  1. A rising wedge has been tapering on the Guppy (see 1D for the best representation) that has become much more apparent in the past several weeks.

To construct the wedge, draw 2 ascending trendlines:

  1. connecting the highs on the 04/18, 06/19, 06/26, and 07/23 daily candles.
  2. connecting the lows on the 03/17, 05/09, and 07/16 daily candles.

Rising wedges are sometimes the pattern corrective trends take on as part of a continuation pattern but are noteworthy for their practical inconsistency with the theory behind them.

The pattern is confirmed, though. The downside breakout below the lower ascending trendline from 3/17 @ ~211.15 is apparent; but how deep will this leg go? This is a question of whether or not the downward trend from 252 is resuming.

A textbook price target after a rising wedge? The first touch on the lower ascending trendline: in this case, @ 192.64. :wink:

  1. At the very least, we had an ascending trendline with three previous touches that broke when price closed below it on the 08/10 1600 ET candle (cf. 1H chart). A small throwback above the line on the 08/11 0000 ET candle was immediately negated by a bearish engulfing candle on 0100 ET, and with that the pair has gone down 400 pips.

  2. What’s significant about 207? Draw a horizontal line across a 1D chart @ that price. Now look back through this year? 206.60-207.20 has been a significant fulcrum.

That’s a large S/R zone, though. So how about something more precise? Draw a fib retracement study from the swing high @ 215.89 (on 07/23) to the recent swing low @ 210.54 (on 08/05). Now look down the chart for the 161.8% fib extension. Ah yes: there it is @ 207.19.

What’s next? fib fan support @ 206.59; then at ~206.30, the 23.8% fib retracement of the entire 251-192 move. Above we have 207.20, 207.80, 208.50 then the 208.94-209.30 region.

105

Glad I got back in short @ 211 after taking profit last Friday. This has been a pretty rewarding swing trade thus far. :smiley:

Pride does come before a fall, though. :o

106

I’m going for something similar to the move last mid-August. Yeah, that big red sucker worth about 2000 pips. I read somewhere last week that drastic market moves can reoccur on the same date in future years, and after this week’s action, I’m starting to believe it a lot more. This down move is bountiful to be sure, but I’m waiting for the complete capitulation candle.

Altho I must confess I’m actually short EURJPY not GBPJPY :o
I chose EUR over GBP because EURGBP looked overbought, seemed like it had abetter chance of retracing than taking off up again, especially after the fall from grace the EURUSD just had. The same factors will take out both pairs, so I’m cheering for all JPY cross shorters out there!

I still believe that this might be oil related. None of these currencies have that inflation backdrop to support their hawkish rhetoric anymore. Combine that with slowing economic data, and I can foresee a global trend towards lower interest rates, or at least perceived that way. (Long enough for us to rake in the pips shorting those currencies!!)

107

Great analysis as usual, Andrew … we listen & learn (or try to!) :slight_smile:

Well this latest move shows that the ram strategy cannot last forever unless you have unlimited funds. And then you are not really trading, just buying, holding and topping up the account whenever needed.

In my demo account, that went from $500k to $1.2million in such a short time … I cashed it out today and now have $400k … it was either that or have it blow out naturally as the guppy moved below 207.

That demo account was there for that express purpose … to see what would happen if you only go long, only buy the dips, and use the interest for equity building. I am not sure they even credit the interest to my acct balance in the demo … it shows up in the swap column but I have never seen my equity balance increase after an interest rollover.
But even with all the interest in there, maybe 50-100k from the beginning, it would not have been enough to save the account during this drawdown.

So … tomorrow a new assignment for the demo: I’ll be playing a combo of trades taken according to my new charts and a buy & hold of the high interest paying pairs, not just the guppy but other yen crosses, but ONLY buying when they have established a bottom & are clearly heading back up.

Hard stops in place for all positions.

This yen strength thing could be more than a passing phase … there could be a lot more downside on all yen crosses before the dust settles. But one day they will bottom and whoever buys there will make a boatload of pips + the interest. :slight_smile:

A recent analysis I read was someone who plays the AUD/JPY, only long and only 2-4 times per year. But he said the 2-4 trades in that one outperform all other trades in his account, combined.

So I am grateful to the ram for introducing me to a new way of trading the guppy, and I will use a lot of what I have learned … but I will not be following a strategy of buy & hold because she just wants to go up…:eek:

108

205s? This is getting serious. :eek:

109

Whee all yen pairs in freefall … I am short everything, just scalping for 20-50 pips each time which is easy to get in this bloodbath.

How far can they go??

110

Yep … a break of 205 and we could be looking at the 200’s or below. I think this could be a major retracement, with maybe one more bounce first, but that should be a shortable bounce, nothing more.

I think the ram’s strategy has pretty much proved itself … it can make money in a ranging market but as a long term strategy you would eventually give it all back.
I don’t think you can say that one currency is permanently better than another…

In the end it just comes back to watch & follow price action and good ol’ money management.

111

The “Stomp the Pound” party continues … I got short on the last sh. Also short the pound. This may not end soon, she just broke 205.

112

In case someone missed this, the MPC’s inflation letter dropped earlier this morning. Here are some details:

http://forums.babypips.com/analyst-arena/15704-pound-drops-king-says-economy-facing-difficult-painful-adjustment.html#post62154

113

Its more like “this will not end soon”. Maybe some small retracements but a move below 200.00 is eminent. I have going all the way to 178.00. Hope it doesnt for all the Long lovers of this pair. The JPY dominance will prevail.

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114

Why 178? I mean, from your charts to God’s ears :slight_smile: … but why that number?
A fib extension?

115

Fib Extension and the only support I think will hold.

116

So those who know what they’re doing … how do you treat a retracement like the present one, currently around 204.40?
Adding? Did you get out below 203.50 and now waiting to get back in?

When does a retracement become a reversal? So far it is barely at the .38 fib retracement from the 207.26 high of the 5am candle.

What is still hard for me is riding out the longer term moves to collect the bigger pips … when it reverses, I think it may be over … or I think it is not, but then it turns out it was over. :eek:

What sort of timeframe is there for the move below 200? What about cadarkitek’s support level around 178 … are you talking days or weeks to get that far down??

All input appreciated :slight_smile:

Ooops … now she is passing 205 and with momentum … more than a retrace??

117

I was stopped out with a 100 pip trailing stop, lookin to get back in(short) on a signal from the present retracement.

A retracement becomes a reversal when a TL is broken, I use both TL and SMAs to determine reversals.

Definately weeks to get to that level(178.00). As with any other chart it wont continue all the way down, there will be retracements but the trend is down so I’m gonna enter on all retracements where I get a signal.

118

My projection.

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119

Thanks for all that good info … what sort of signal(s) do you wait for to enter a new short?