This month's ProAct Traders “Pay Your Mortgage Trade” idea is found in the GBPJPY pair. I chose it for these two reasons: Brexit (weaker pound) and the BOE rate cut also weaker pound.

Elkana is on holiday with his new bride so he is not collaborating on this.

GBPJPY is in a nice downtrend and the next support area is at the 129.88 area. I would watch for a 4^th wave (bounce here) and then at the 0.500 Fibo of that bounce look for a 5^th wave down.

How to trade it? You will need to wait for your set-up to show up, for London & New York traders, that will mean waiting for the formation of the rectangular pattern (pole trade and a break hook and go) and use the respective risk reward ratio to start trading this currency pair. Currently the ATR (Average True Range) of the currency is 302 Pips per day, so this might not take long!

Where should we expect the price to go to?

If the 3rd wave on the 240 min time frame is correct then the 3^rd wave of Elliot Wave Theory should continue to the 129.88 area. That will give us a nice 300 pips move. A short bounce back to the trend wall would give a 150 pip move up before the resumption of the downtrend. The downtrend from the 132.50 or so area to the S8 target @ 124.00 would add 850 Pips to this trade. Remember the “ pullback is your friend” in route so use those to add to the position.

Our trading methodology is based on proprietary technical indicators. We pay attention to what the big banks are doing in the markets (the Big Boys) and specifically look for opportunities that have a high opportunity and low risk. We always identify our target before entering a trade, and we focus on the risk of the trade instead of the reward. We have (and follow) rules, and we press our winning trades without exception.

Remember that we recommend that you always trade with stops. And if you don't trust yourself or think you'll get cold feet in a long trade like this, then place the trade and walk away. Better to get taken out by a stop or target than to second guess an active trade and take yourself out. Do your research before you place your own trade. Trust your research.

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.