Forex Trade Setups Commentary: GBPJPY 4hr price action, 9th February 2011

Forex Commentary:

The dollar gave up gains against the Japanese yen and the British pound Wednesday after Federal Reserve chief Ben Bernanke’s congressional testimony pushed U.S. Treasury yields slightly lower, making the greenback less attractive.

The EURUSD rose to $1.3735, up from $1.3685 earlier and from $1.3634 in late North American trading Tuesday.

This was Bernanke’s first appearance before Congress since Republicans regained a majority in the House of Representatives in the last election.

Bernanke defended the Fed’s decision to launch the $600 billion bond-buying program, citing still-high unemployment rate and benign inflation. The program has also been a major weight on the dollar, as so many investors see it as a way for officials to devalue a country’s currency.

Trading Setups / Chart in Focus:

GBPJPY:

The GBPJPY 4 hour chart has formed a few solid bullish price action setups with the daily uptrend recently that have worked out for decent gains.

We can see in the chart below a pin bar setup formed on February 1st that provided traders with a solid 1:2 risk / reward. On February 4th a fakey / pin bar combo setup formed, again providing a solid 1:2 risk reward. Yesterday a pin bar formed again on the 4 hour chart and has already provided a reward of 2 times risk, possibly more depending on if resistance near 133.00 breaks decisively to the upside.

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my price action trading course.

Other Markets:

On Wall Street today U.S. stocks edged lower as investors pulled back after a five-month rally that pushed the market to 2.5 year highs.

Just before the market close the Dow was down 27.93 points, or 0.23 percent, the S&P 500 was down 7.01 points, or 0.53 percent, and the Nasdaq was down 10.31 points, or 0.37 percent.

Upcoming important economic announcements: 2/10/2011

4:30am EST: Britain – Manufacturing Production m/m
7:00am EST: Britain – Asset Purchase Facility
7:00am EST: Britain – Official Bank Rate
Tentative – Britain – MPC Rate Statement
8:30am EST: United States – Unemployment Claims
5:30am EST: Australia – RBA Gov Stevens Speaks