GBP-JPY Intraday Trading Strategy (System)

by Vahid | Forex Market Analysis and Signals | Monday, January 28th, 2008

My forex reporting arrangement is changed again. Sorry for several changes but I am not fully organized for publishing the reports yet and have to change the program to balance everything. But I think I am on the right track now. To know about the last changes I have made on the report publishing arrangement please take a look at this page and if you have any suggestion, please let me know by posting a comment on the same page.

During the day, I publish one report which is focused only on GBP-JPY for intraday trading. GBP-JPY is a hot currency pair and has a lot of good trading opportunities. I still publish the nightly reports too. The nightly reports will cover all the 4 majors plus GBP-JPY, EUR-JPY, USD-CAD and AUS-CAD with detailed analysis and also if I find any good swing trading opportunity in the rest of the currency pairs listed here, it will be reported.

Sorry for the the delay that the current report has but hopefully it will be published on time from tomorrow.

Please note that this report will be updated several times during the day and so you have to check beck from time to time. You just need to refresh the page and see the updates.

How do we trade intradaily? What strategy (system) should we use?

I know these are the questions that most of you want to ask me. Those who are familiar with my reports know that my strategy is based on the technical analysis, candlesticks, Bollinger Bands and Fibonacci Retracement Levels. In intraday trading, I also use four moving averages in the smaller time frames like 15min and 5min charts but just for keeping the trade and not for the entry signals because they are delayed.

Today, I will write an article that explains the my intraday trading system in details.

Lets analyze the GBP-JPY.

If you have any question, please post a comment using the form at the bottom of this page. I will get back to you shortly.

When you want to start trading intradaily you must check the bigger time frames first and see what they show. So I start with the daily chart.

5:48pm GMT

In the daily chart, the price has broken the downtrend resistance (thick dotted green line) and started going up strongly (the Jan 22th and 24th candlesticks) but it was stopped by the Bollinger middle band. The Jan 25th candlestick says that Bears are still strong and are trying hard to stop the Bulls. Today they could take the price as low as 209.28 which is much lower than the low price of the Jan 25th candlestick BUT the Bulls showed good strength and took the price up again.

Today’s candlestick still has 6 hours to become completed. So we have not decide according to its shape yet.

So the daily says that the price wants to go up but Bulls are not stronger than Bears yet. So we are in an indecision situation.

There is something else too. It seems the 23.60% Fibonacci level is working as a strong resistance. The 25th candlestick just tested it and failed.

I drew the Fibonacci levels in the daily chart from 1 Nov 2007 to 22 Jan 2008.

6:14pm GMT

The 4hrs chart shows that the price is inside a symmetrical triangle. The last candlestick which still has about 2 hours to become completed shows indecision whereas before it the price has been going up.

6:20pm GMT

The one hour chart shows a smaller triangle which is formed around the 23.60% level. I drew the Fibonacci levels in the one hour chart from 23 Jan, 13:00 to 23 Jan, 8:00 candlestick.

6:36pm GMT

The 15min chart shows that the price is trying to break the triangle resistance and go up. It has been unsuccessful so far.

6:42pm GMT

The 5min shows that the price is trying hard to break the resistance and go up. If it breaks up we will go long and if it breaks down, we will have to go short.

It seems it will break up because it is trying so hard and all the last few candlesticks are gathered around the resistance. Let’s see.

7:43pm GMT

As I told you it will break up. I still have my long position opened at 211.70.

The 5min and 15min charts show that it is broken up but the bigger time frames need more confirmation.

10:42pm GMT

It is going up as predicted. I still have my long position but it is right under the resistance or 100% level at 212.63 and it seems it is acting as a strong resistance once again. If it kicks the price down, we have to close our long position. If it breaks the resistance up, it can go much higher. Lets see.

11:38pm GMT

As predicted, the 100% level worked as a strong resistance and the price went down. Now it is showing a buy signal to go up and retest the resistance.

Check back for the updates in few minutes.

Further Reading:

10 Comments:
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Comment by Chris

2008-01-28 12:30:41

Hi, can you do a chart on the aud really would appreciate it thanks Chris aud/usd

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Comment by pol

2008-01-28 13:05:08

Hello,
may I ask you a question?After looking at all the charts from day to 5 min. at what chart we have to decide for seeing the breakout.I suppose its on the 5 min. or must we wait for the closing of the first full candle at the 1H chart to confirm How can we prevent a false breakout?
Can we use the SH or other indicators here fore?
thanks in advance.

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Comment by Vahid

2008-01-28 14:07:58

Pol,

Generally the bigger the time frame, the more reliable the signal. So when 1hr shows a breakout it is more reliable than 5min. So if you don’t like to take a big risk, you have to wait for the bigger time frames to confirm the breakout.

We can not prevent a false breakout. Forex or stock trading is all the matter of taking risk. Even the strongest signals can be false. So we just analyze and predict and then we have to take a risk. That’s why we use stop loss to protect our capital.

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Comment by Scromie

2008-01-28 14:48:18

Hey there Vahid - when you said that you still have your 211.70 long position - where did you set your stop/loss? What are you looking at for Take Profit? I didn’t see that in the analysis above.

BTW - 211.70 looks REALLY REALLY GOOD right now. As I type this, it hit 212.15. This is pretty good for me, but I’m new….

Thanks again for your analysis.

Scromie

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Comment by Scromie

2008-01-28 14:50:46

Also, if I’m reading this right it looks like a channel is forming starting at 212.01 (abt 2:35 PM MST) on the 1 min chart. Can you confirm?

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Comment by Scromie

2008-01-28 16:26:54

Wow - huge dip down past 212 (abt 211.98)! I hope you closed out that order…..

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Comment by Eric

2008-01-28 17:23:23

Thanks Vahid very instructive. What are the MA that you are using and how do you use them.

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Comment by mabel

2008-01-29 07:35:43

Hi, I enjoyed your article on GBYYen. I dont trade this pair as I find it too volatile but thank you very very much for preparing this article. I understand that this pair is for experienced traders only. How true is that?
Can I know what moving averages you use for intraday? From what I read so far, you write 3 reports - 1 on GbpYen, 1 in morning and 1 at night.
Lastly, I also noticed you also advertise for other forex programs eg forex killer. Is it good? Do you have any comment on this? I think I will read all the articles you have posted here and hopefully grow to be a better trader.
If you dont mind, how do I read the free signals? I thought if there are signals there will entries/exits.
Thanks
Mabel

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Comment by Scoundrel

2008-01-29 08:40:10

Thanks for all your labor, Vahid.

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Comment by Vahid

2008-01-29 09:38:38

Eric,

There are 4 MAs there. The method in all of the is Wilder’s Smoothing and they are applied to (H+L)/2

1- 8 MA
2- 5 MA
3- 3 MA
4- 40 MA

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