I believed that GJ was bullish, and it was falling down to get more buyers to push it up to cover the gap. Indeed, GJ rose up to cover the Gap. But it was stuck at that area. That area formed or acted as a resistance, so GJ couldn’t move up. Also, the period was a holiday period. There are not a lot of trading activities that are going on during the holidays (read summer holiday trading). GJ broke upwards towards new year, then it stared it way all the way down. At the time of writing this post, GJ high for 2010 was on the 4th of January 2010, and it is still going down.

Have a look at all what I am saying at the chart below.

The way I am seeing it, GJ is going down, there is no support for it. If you can zoom out, you would notice where GJ would find a major support or resistance. The best way to trade it is if you see a signal at this points. Well, this is just talk. I wish it was easy like that. It is easier to talk than to trade that because trading involves a ot of emotions.

In an unrelated trading, take a look at Oil chart.

I don’t know if it is doing a head and shoulders, meaning that it would go down, or if it is a double bottom meaning that it would rise up. Today, 22nd of March is showing bearish, i.e it is going down. I don’t trade oil, but I tend to follow it to know the sentiment of the market. A higher oil price means a lower dollar, that means that GJ would likely fall because it would follow USDJPY. Only GBPUSD would be able to save it. Just incase you want to follow oil chart, the symbol of oil is CLQ08.NYM OIL or CLK0. Online trading.

The NFP (non-farm payroll) showed the the unemployment rate decreased in America. It went from 10.2% to 10%. This is dollar bullish. Since the values of the NFP were positive, GBPJPY went higher. The market never lies. I believe it already had a hint that the NFP would be bullish, that was why it showed a daily pin bar in the previous week.

For now, GBPJPY has almost given back what it gained. It is down. this is a chart of it now.

At the time of this posting,  the currency is going up. It might fall. I think GJ is bullish. There is a gap. Click on the map to see the circle where i said gap. In forex, most gaps are usually filled.

If I am trading this, I would have bought at 142.48 and put a close or stop loss at 10 pips below the red line. 142.00. This is also a psychological point because of the double zero digits. Since the pair would likely close the gap, I expect to close this trade at 147.11. This means that this is more than a 450 pips trade. Well, this is all theory. Forex is unpredicatable.  Anything can happen while you are engaging in online trading. The best thing is always to lock some profit, so if anything happens, you can say you made some money.

Summer period is usually the time when the market is ranging. This is because most banks and hedge fund managers are on their vacations. They are either enjoying their sweat or they are rethinking their strategy for the next trading period. Since these traders are not there, there are not enough traders that can force a trend to show.

For instance look at GBPJPY, since yesterday, i.e Sept 1st, it has been ranging. I cannot believe that. GBPJPY is a volatile currency pair. Its daily range is about 300 pips, but it moved about 150 pips yesterday. This means that a new trend is developing. I believe the trend is up since the world’s economy is sloly improving. But the question is when will the developing trend become visible? This is a question that only few people have an answer to.

Click on the picture to enlarge it

Friday is Non farm payroll, so there is a possiblity that the trend would develop. I think the trend would become clear next tuesday, after USA labor’s day. That is the official time whn work resumes. So when work resumes, most traders in financial institutions would be back to work.

Some traders that claim that they trade for a living usually go on their own vacation during summer time because the market is usually ranging. They don’t want to lose or give back their earnings. And really, ranging markets can break someone’s account. The only way to trade a ranging market is to know the high and lows of the market, then you trade it. Another way is to go for smaller pips. If you usually take 100 pips per trade, you would have to reduce the amount of pips you want. You can go for 50 pips or less, so that you can survive to see tomorrow.