GBP/USD: Possible Buy at 50% Fib? – Trade Closed

Trade Update: 2011-8-2 3:42

GBP/USD Hourly Chart

I have to confess something. Are you ready? Well, I kinda earned zero dollars on this trade. I basically closed at a loss because I was afraid price was going against me. Instead of earning a huge amount of pips, I ended up with a 0.50% loss!

As you can see from the chart, my stop was placed perfectly as price found major support at 1.6260. It’s obvious that fear got the better of my. I didn’t have faith in my plan and cut my losses early. Lesson learned!

Anyhoo, I’m currently looking for new setups to trade on the majors. If you have anything in mind, don’t hesitate to hit me up!

Trade Update: 2011-7-28 1:42

GBP/USD Hourly Chart

And I’m in! In accordance to the trading plan that I wrote yesterday, I bought Cable as it found support around the 61.8% Fibonacci retracement level. I bought at market at 1.6332 and placed my stop below the most recent swing low at 1.6250.

I’m ultimately aiming for new highs, but I want to manage this position conservatively. That’s right, I’ll be playing “Little Miss Conservative Huck” (no miniskirts and short shorts, ha!) this week as I want to end the month with a win! I put on two positions, with each only having a 0.5% risk, to enable me to easily scale out of my trade. This time I’ll make sure I don’t forget to move my stop to breakeven. Pinky promise!

In the event that price tests the most recent high, I plan to close half and let the other position run! I hope I do well on this trade!

Trade Idea: 2011-7-27 3:42

GBP/USD Hourly Chart

I’ve decided to go with the flow and get the most out of the market’s seemingly anti-dollar sentiment by buying GBP/USD. I hope it’s not too late to sell some Greenbacks!

Of course, before going in a trade, I always try to check the fundamentals first. For now, it looks like traders are staying away from the dollar due the ongoing debt ceiling debate. With each day that passes without a resolution, the chances of the U.S. losing its AAA credit rating increases.

It’s also important to note that Greece finally received the much-needed bailout funds from the European Union. Over time, I believe that debt worries in the euro zone will fade.

Technically, the pair is currently retreating from its six-week highs with Stochastic easing out of overbought conditions. However, given the recent dollar weakness as of late, I’m thinking that perhaps what we’re seeing now is nothing more than just a retracement.

I believe Cable will find at least some support between the 38.2% and 61.8% Fibonacci retracement levels. My ideal entry is at the 61.8% Fib level, around last week’s high at 1.6330. But if I start to see signs of a reversal (c/o my ever-so-reliable candlestick cheat sheet) at higher levels, I think I will pull the trigger to buy.

If my trade gets triggered at 1.6330, I’ll set my stop below this week’s low at 1.6260 and then maybe aim for a little higher than today’s high at 1.6470? If my plan works out, I will have a 2:1 return on risk ratio with this trade!

Do you agree with my trade idea? I do hope so. But if you do not, feel free hit me up in the comments, in Facebook, in Twitter (@LoonieAdventure), or in Google+ and present your counter-argument!

  • Dean FX Paul

    I see the USD as more of an issue at the moment.. GBP seems to have more steam left in it yet..

    • Joshua Pearce Gibson

      Just realized this article is based off H1 charts. I retract all statements. I’m trading off Daily.

  • Irma

    New to this, but will be following with interest – will try a paper trade.  Goodluck

  • Candle pip maker

    Ah i though that you were a member of Babypips, You should have looked at pipsychology

    link to goo.gl

  • Fecri Irsat

    hi Hucklekiwi, if you look at the 4hr chart you will see a up wedge formed, in my opinion it is not a good idea to take it long, the price action might break this wedge…

    • ANIROODH RAVI

      well said Fecri Irsat. good input for cautious watching and act suitably. 
      thanks
      aniroodh ravi

      • Fecri Irsat

        thanks, the latest of cable the price poked itself downwards through that wedge and lets see what happens see if the price will further down??? I am short from 1.6390

  • Joshua Pearce Gibson

    Recent events(the last 24 hours) of activity in the Eurozone stock and bonds markets may suggest a different outcome of debt contagion fears. Use caution.

  • ANIROODH RAVI

    Hi Huck

    GREAT SET UP.  I WISH YOU LUCK.

    ANIROODH RAVI

  • Harry Pilgrim

    I’ve got a long cable at 1.5990. I want to add to it at 1.6200-ish upon a retracement towards those levels. My target for the position is 1.6800. So I agree with the direction, long, but expect a bigger dip.

    I prefer position building, but good luck with your swing trade!