Sterling has been busy and it’s not quite done moving just yet. With the BOE meeting coming up, it’s time to do a quick forex update on my pound positions and make small adjustments.
Original Trade Idea: Forex Trade Idea: GBP/NZD Pullback Short
It’s been a week since my first short entry at 2.1916 and since then, the pair has bounced high enough to triggered my second short entry at 2.2300 for a total risk of 0.50%. With the market dropping back to 2.0000 since my 2.2300 entry, my total position is actually in profit, so everything is looking good at the moment. And with expectations of weak sentiment to continue, especially after ‘rubbish’ UK manufacturing performance, I’m going to continue to hold this trade for now, but I would like to reduce my risk a little bit.
Since it seems like the Fibonacci retracement area and moving averages have drawn in the sellers, a break above this area means an invalidation of my trade idea. I want to cut that off quickly if it does happen so I decided to roll my max stop down from 2.2650 to 2.2475, taking me from a 0.50% risk to a max 0.31% risk.
Going forward, if there is another move to the downside, I’ll look to roll my stop down once again to lock in profits from my second position and potentially add another small position on a break of the support area around 2.1500.
Original Trade Idea: Forex Trade Idea: EUR/GBP Resistance to Hold?
Looks like I may have jumped in a little too early on this EUR/GBP short position as the pair has had no trouble moving higher, again likely on recent pound bearishness. It’s now gotten up to the major psychological level of .7500 and broken above, but seems to be holding for now. There was another drop to my short entry level, but that proved to be another buying opportunity so I’m a little concerned. But I’m not too worried since my risk is small and it’s barely even halfway to the trade’s max stop level.
With recent behavior acting the way it is, I think I will close early if the recent swing high around .7550 is broken, so I’m in watch mode for now to see if Sterling bears will continue to dominate. And if there is a reversal back to the downside, that would form a double top–a strong bearish signal. If that’s the case, I’ll roll my stop down and add another small position if it gets below the .7300 support area.
For now, just gotta wait and see what we get during the Bank of England monetary policy meeting coming Thursday, which is forecasted to make no changes to current policy. Either way, I should be okay overall since I’m both long and short the British pound, but I’ll definitely make adjustments quickly if the story changes. Stay tuned!