Look Out! Possible GBP/JPY Reversal

Posted by Nick 12 Comments

Hey Guys,

I know the logical part of my brain said I was going to hold back from trading until this whole financial crisis quieted down but the trader inside me wants to take this reversal. It looks like a very nice set-up so if it triggers I am jumping in:

Pair: GBP/JPY (4hr Chart)
Long: @170.00 (break of the temp S+R line)
Stop: -50pips
Target: +50pips

Tags: forex, forex analysis, forex profit, forex trading, forex trading education, forex4noobs, free forex education, free forex signals, gbp/jpy, trade update, weekly analysis, www.forex4noobs.com

Arthur

Hi Nick,
just a question about the 170 SR….is that purely because it is a psychological number? There isnt much history behind it unles you go back to 2001. My understand ing of SandR is that you go back about 5 years at the most?
Thanks!
NickB

@Arthur: Have you read the free e-Book it is clearly explain dhow I pick minor S+R levels for reversal trades. It’s not something I can explain in 1 second. Go back and read the book…..
Roy

Hi Nick,

I also read your ebook (twice, thoroughly), but also still have the same question as Arthur:

In your ebook, Chapter 5, Trading Reversals, you state you are looking for a pattern, and also a line for trading a reversal.

You also write that you place a temporary line for entering the trade at the bottom of the 2nd candle prior to the reversal candle.

Now level 170 is tricky, it is either botton of 3rd candle before the reversal, or top of 1st candle before reversal.

Maybe you or someone can explain the situation that both Artur and me can understand?

I appreciate you!

Roy
NickB

@Roy:
From the e-Book:
At this point you should be thinking that a reversal is probably coming. You could enter here but personally I find it a little too risky. I like to find the closest applicable line or place one and use that as my entry. If there is a scalp line near by you can use that as your entry level otherwise you will need to place a temporary line. There is no exact distance I do this all by eye. In the example above there is no scalp level so I need to place a line at the nearest applicable level. As far as I can see the best level to place it at would be the low that formed two candles prior two the reversal candle.
——————————————-

In this case I looked for the nearest applicable line and it was the 197.00 Psych level which doubled (closely) as the high two candles prior.
Roy

Thank you Nick,

Now I understand your point about the temporary line you drew.

However, from the ebook, I concluded that you also need a line for entry near the reversal candle.

Oon two examles in the ebook it was either at the bottom end of the wick of the reversal candle (easy trade), or somewhere on the candle itself (tricky one).

So, in this example it would be aline at either at 166.10, or, example: 167.00.
This is what I concluded from the ebook.

So now you say that you don’t need that line for entering the reversal trade?

Thanks for claifying!

Roy
NickB

@Roy: There is onlye one entry line and it was 170.00, it was literally ‘the closest applicable line’.

You’re confusing me. How could the entry possibly be 166.10 or 167.00? Those lines are below the reversal candle? To hit those lines it has to move in a bearish direction not a bullish.

It is so simple:

1) The reversal candle closes at 167.36
2) You look for an entry trigger line.
3) You find that 170.00 is the closest applicable line.
4) You place it and wait for a break of the line to enter the trade.
John Umoru

WOw! What a great analysis Nick!

I Read the analysis some hours late and entered Long immediately I saw the chart and within 1 hour I have made 103 PIPs.

Thanks for sending me the email.
Bullrich

….maybe i need glasses! I was searching but couldn’t find this ebook! Can anyone help me?
Thx, Bullrich
NickB

@Bullrich: Go to the forum and log-in. There is a white box under the site navigation. Read what it says in there.
Bullrich

@Nick: thank you! I got it
Tora

Hi Nick, I am new to your blog and I am starting to really like it! I have one question, when you enter a trade do you actually wait for the scalp line or S+R line to be broken? It seems a lot easier to leave an entry order at the trigger line and wait and see for the target or the stop to be hit. I would appreciate your comment. Thanks.
NickB

@Tora: Hey Tora, go to the forum and grab the free e-Book it will answer all your questions….

http://www.forex4noobs.com/forums/talking-forex/1924-nickb-method-free-e-book-download-here.html