Long GBPJPY Anticipating Strong GBP DataI've realized that I've making too many trades lately and with increasing complication in my analysis. This trade is my attempt to go back to the core of being a contrarian, trying to find the most "pain" in the market and benefit from it.
My game plan is now: first looking at retail's positioning that is the most extreme for the currency pair in focus, monitoring the price action associated with the pair to see if market has been agreeing/disagreeing to that view from the retail's perspective. Finally is to assess the % probability of the fundamental event in focus and conduct a scenario analysis.
Analysis:
- Positioning: Net Short, most in GBPJPY, no pair is Net Long
- Price action: Net Long at this point thus there is a disagreement between the Retail's position and the market's sentiment. GBPJPY in particular is relatively flat.
- Fundamental: Service PMI is expected to be flat but I think it has a better chance to beat the estimate.
Conclusion: Go Long GBPJPY, if the data is bad I expect the initial reaction of people who Shorted early is to TP and that will send the pair temporarily higher and I will TP there. If the data is indeed a beat, I can hold this trade longer, maybe to end of day.
Technical levels:
- Support: 149.0
- Resistance: 149.5-150
