GBP/USD: Looking for a Better Price to Short – Trade Adjustment

Trade Adjustment: 2012-9-26 2:04

GBP/USD Hourly Chart

I’ve probably eaten 15 pints of ice cream already after missing the 100-pip move on GBP/USD by TWO measly pips! Ugh! But I have a plan… I hope it’s not yet too late to jump in on the trend.

The pair did get rejected at last week’s resistance area just like I hoped it would. Sadly, my trade didn’t get triggered as price only went up to 1.6268 and my order was at 1.6270.

But let’s not dwell on my sob story. Looking at the 1-hour timeframe, a head and shoulders chart pattern has materialized. And you know what, price just closed a below the neckline support!

I plan on jumping in on the trend when GBP/USD tests the previous support area for resistance around 1.6185. Stochastic indicates that the pair is still oversold which suggests that I could get in at a better price if I just wait a little. I’ll place my stop well above the Tokyo session highs at 1.6235.

To make the long story short, here’s my plan:

Short GBP/USD at 1.6185, SL at 1.6235, PT1 at 1.6100, PT2 to be determined. Risk disclosure.

Trade Idea: 2012-9-25 1:46

I’m hoping to bounce back from my loss last week with this trade on GBP/USD. I spotted setups on both the daily and hourly timeframes. Are you with me on this?

GBP/USD Daily Chart

I fell head over heels for this setup on GBP/USD almost as soon as I laid eyes on it. On the daily time frame, the pair has formed reversal candlesticks around its previous high, suggesting that it will soon trade lower.

GBP/USD Hourly Chart

I then zoomed in to the hourly time frame. To my surprise, I spotted another bearish setup that made GBP/USD look even sexier! Price is slowly creeping higher and it looks like it would soon test resistance at 1.6270. If the pair finds resistance there again, we’ll see a head and shoulders chart pattern–a formation that is widely considered bearish.

Should my trade get triggered, I’ll place my stop at 1.6325. I believe it’s a good area to consider my trade as invalidated as it’s well above last week’s high. I plan on taking profit on half of my position at 1.6170. As for the other half, I will keep it open until the downtrend lasts.

Fundamentally, it seems that we’re seeing a return to economics. Market participants are starting to realize that the all the stimulus measures that central banks from all over the world are nothing to be happy about. They were started because the economy was in the dumps, and that’s not something to be optimistic about.

The Bank of England (BOE) meeeting minutes released last week also showed that the central bank is open to further easing if the economy further deteriorates or doesn’t get better. As we have seen in the past, quantitative easing has been bearish for the pound.

Finally, I think that the rally in risky assets like the pound is severely overdone. The market will have to correct itself soon.

Here’s my game plan again:

Short GBP/USD at 1.6270, stop at 1.6325, PT1 at 1.6170, PT2 yet to be determined. Risk disclosure.

XOXO,

Huck

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10 comments

  1. Kingkevbo

    I’m in the trade too. Got in on 1.6220 SL now moved to BE. I’m in for the long haul with a TP set at 1.5773. Gonna hold this position for a few weeks I think.

    Reply
  2. Derek Lim

    SL @ 1.6235 seems abit risky. That’s the top of a downward channel. Who knows GBPUSD might test 1.6235 before resuming its downtrend again. Hope you pull this off and GBPUSD would just test 1.62 and go lower. I am short on GBPUSD as well. Got in since Monday @ 1.6243

    Reply
  3. u5urp3r

    GDP numbers out on Thursday (US and UK) will shift this one way or another, barring any major developments I think we are range bound till then.

    Reply
  4. Ozzymau

    Good eye Huck, I got a good 55 pip scalp out of it yesterday. Road the down trend a little bit longer than I like, but I was around to watch it, plus a 50 pip short scalp on the Euro yesterday was all good..

    Reply
  5. treign

    I closed mu short on this for +50 pips profit , Im glad as would have stopped out for 0 otherwise, often best to cut and run!

    Reply
  6. treign

    Im with you on the trade short at 1.6222 t/p @ 1.6100 , originall s/l above tail of previous shooting star @ 1.6320. now s/l set to 0. lots of downside technicals so just got into the trade rather than waiting the pullback! perhaps to risky for some

    Reply

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