Trade Idea: 2011-9-7 00:35

As you can see from GBP/USD's hourly chart, the pair found a bottom around the 1.5950 area. It seems to me that the pair is currently climbing ever-so-slowly up as traders take profit. I think this is the perfect opportunity for us late sellers to jump in on the trend at a good price!

Since I believe the pair still has room to retrace, I'm looking to short at the 50% Fibonacci retracement level IF I spot some reversal candles. These reversal candles can come in many forms, so I'll just refer ya guys to the School of Pipsology candlestick cheat sheet.

As for the fundamentals, I noticed that there are a few potential catalysts on tap from the U.K. today listed in our forex calendar. Halifax HPI, manufacturing production, and industrial production reports are scheduled to be released later. I don't mean to sound pessimistic, but with the recent roster of negative economic data we've seen from the country, I doubt that these reports would fuel the pound's rally.

Also, with talks about a possible credit downgrade for Italy, I'm anticipating risk aversion rear its ugly head back into the market and send higher-yielding currencies lower.

Now to recap, here's my plan:

I will sell GBP/USD when reversal candlesticks materialize around at 1.6050 area and aim for former lows around at 1.5950. As for my stop, I'll place it above the 61.8% Fibonacci retracement level and the 1.6100 major psychological handle.

There ya go, that's my trade idea for today. Care to share yours too?

Follow me on Twitter
Like my page on Facebook
Add me to your Circles on Google+