The Pound/Yen pair has been trending up for quite awhile now. I would like to be ready for a correction when it comes. We all know how volatile and fickle this pair can be, so I'm going to structure this trade a bit differently than usual. Below is the 15 minute chart of this pair which shows two entry lines. My plan is to sell a 1/3 size lot upon the break of the first support line.
Below is an hour chart of the pair showing the second entry line (red) and the base line (the green one, which is our target). When we have entered a 1/3 size lot on the 15 minute chart, I am going to enter another 1/3 size trade if the pair closes below the entry line on the hour chart. When, if ever will I enter the last 1/3 of the trade, you ask? If the pair closes below the 800 sma, I will enter the last 1/3 of the trade and hopefully ride it down to the base line.
The reason I am structuring this trade this way is that the initial stop is going to be at 151.00 and that is a huge stop loss. If we get in on the first 1/3 of the trade and then it goes back up and stops us out (like the AUD/USD just did), we will be out less than 100 pips (at least where things are now). If we get to open the second trade, the stop will move to the original entry price, so we again will have limited risk. I will move the stop for both trade to the second entry line if the trade gets +50 pips. If we get to the 800 sma, I'll post ideas about where the stop should do. For now, we wait.
Happy Trading!
Happy Trading!
