Trade Idea: 2012-5-10 1:54
I fell head over heels for this setup on GBP/USD almost as soon as I saw it on Big Pippin’s Daily Chart Art. Doesn’t that descending channel look oh-so sexy?!? I’m not gonna go gaga in selling the pound just yet though, as I think it still has some room to go higher.
As for my stop, I put it well above the trend line at 1.6215 to take account any unexpected volatility that may come with today’s potential market-movers. I’m going to take profit at the bottom of the channel at 1.6030.
Fundamentally, I’m also bearish. For one, the U.K. has slipped into a recession again. The U.K.’s economy was reported to have shrunk by 0.2% for the first quarter of 201. In addition, the euro zone’s debt problems have flared up again with Greece and Spain on the spotlight.
I think the success (or failure) of my trade will depend largely on how the Bank of England (BOE)‘s interest rate decision will go later. The market widely expects the central bank to keep rates unchanged and implement no additional quantitative easing.
To recap, here’s my game plan: