I entered a short position on GBP/JPY last night after the pair broke out of a bearish pennant. Today, the pair continued in my favor, all the while exhibiting some nice action on the intraday chart.

First of all, about the position - after entering last night at 143.073 (down red arrow), I woke up this morning to find that the pair had moved in my favor overnight by more than 1R. So, according to my rules, I moved one of my two initial stops to breakeven and the other to 1R above the low. Half of my position was stopped out for a profit of 48.8 pips while I was at work this morning (red "X"). The other half is still open with a stop at breakeven, currently up approximately 430 pips. :-)

Now take a look at the 30 minute chart below (please note, I never trade off of time frame this short - but I do like to look at the 30 minute chart every now and then to see what's going on!).  Last night I noted the area around 139.00 (dotted horizontal line) as an area of support that I'd be watching.  See how the price tested and bounced off of this area in this morning's session in the first red circle?  If I hadn't been at work at the time, I'd have moved my fixed-pip trailing stop to 1R off of the low and would have captured more pips on this half of the position when the pair retraced shortly thereafter.  However, I wasn't able to do this, and that's how it goes sometimes for the trader who works a full-time job as well.  You've just got to accept it and take what you can get.

 

After the pair tests support and retraces, it resumes the downtrend and again tests support. This time, though, it breaks through it. Notice, though, after it breaks through the area of support, it retraces and tests the 139.00 again from below in the second red circle.  We see that now this area of support has become an area of resistance, and GBP/JPY appears to be reacting off of it as such; the pair will likely continue lower.  Oftentimes, areas of support, once broken, will become areas of resistance and vice versa.  This is a great example, and if I saw this happening on a 4 hour or daily chart, I'd probably add to my position here now that the pair has shown that it will respect 139.00 as an area of resistance.

This has been a fun trade to watch unfold.  We'll see how much farther it can go.  Now that support has been broken, it's anybody's guess!