2025/02/20 GBP/JPY Strategy
After the previous day’s drop, the flow has turned fully to the downside.
Price is moving toward the red line at 189.5 that I marked in the weekly strategy, but I’d like to wait for a retracement before looking for an entry.
The ideal is Scenario A: a short on a 4-hour role reversal after a big retracement, but given the strength of this drop, I don’t think the chances of price retracing that far are high.
The buy scenario from the current shape is Scenario B: if price rises above the 190.6 level, I’ll switch my bias to buying.
Realistically, I’m looking at Scenario C, a short when price hovers around 190 and then drops again. However, support from the 189.5 line is also possible, so I think the entry will need to be made while staying ready for a sharp rebound.
If price reaches the 189.5 line and breaks below it, or if the chart shape changes, the strategy will need to be updated.
Review
Price was already falling when I posted the morning strategy, and in the end it reached the red line without making any retracement.
○1
If you were watching the chart from early in the morning, you could short at ○1, where there was a retracement and lower highs on the 5-minute chart.
If you caught that one, you could have wrapped up trading in the morning and called it a good day.
○2
If you wanted to keep pushing for another chance after that, the short would be at ○2, where price failed to rise fully and looked like it was about to drop again.
However, the lows were turning up (making higher lows), and it was a price zone where a bounce could be expected, so it was a short-term trade that required quick decisions.
It’s a spot you didn’t need to force.
This article reflects the author's personal view of the market. It does not recommend any specific trade; all investment decisions are your own responsibility.
