Retracement Play on GBP/USD – Trade Closed

Trade Closed: 2012-1-8 23:58

GBP/USD 1-Hour Chart

Just a couple of hours after my trade got triggered, GBP/USD plunged down the charts and stopped me out. Boo!

I was right about anticipating the U.K. Services PMI to come in better than expected. However, I was dead wrong about a positive report being enough to boost the pound. As it turned out, the risk aversion vibes sparked by rumors of a German bank needing

Stopped out at 1.5540: -50 pips / -1.0%

Oh well. I hope everything turns out better from here on out.

Trade Idea: 2012-1-5 01:23

GBP/USD 1-Hour Chart

I want to start the year on a good note, so I’ve chosen a trade setup that I think has a high probability of winning. As you can see on the hourly chart of GBP/USD, the pair has been on a medium-term uptrend. It has made “higher highs” and “higher lows.” With that said, I’m joining the bulls’ camp!

I know, I know. Risk aversion has been haunting higher-yielding currencies lately. However, I think it’s noteworthy to mention that news reports causing investors to flee to the safety of the dollar and the yen are from the euro zone (read Pip Diddy‘s EUR commentary today), and NOT the U.K.

In fact, we’ve gotten a couple of positive reports from London this week. The U.K.’s manufacturing and construction PMIs for December came in better than expected. And so, I’ll be keeping my fingers crossed for the services PMI to top expectations too, and hopefully spark a pound rally.

So what’s the game plan?

I’m looking to buy the pair at 1.5590, which is somewhere between the 38.2% and 61.8% Fibonacci retracement levels as the Stochastic shows that the pair is almost overbought. If I get triggered, I’ll set two profit targets. The first one I will place at the most recent swing high and the other I will place at 1.5750. As for my stop, I’ll place it 1.5540.

Buy GBP/USD at 1.5590, SL at 1.5540, PT 1 at 1.5570, PT 2 at 1.5750.

Wish me luck!

XOXO,

Huck

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

  • Jānis Pusplatais

    So far so good. Wasn’t good feeling at 1.5552.
    Good luck everybody!

  • SwordOFManagement

     You never put anything on your chart that is not absolutely vital.

     You can point to the 50% level with your cursor and see 38.2 & 61.8 levels in your head if you even use the rets for a week.
     If you know that the rets are there but do not draw them then your mind is free to consider new information.

     If you draw a channel then price is channeling
     If you draw a support level then price is supported
     Add an oscillator and price is overbought

     But draw nothing and add nothing and you are left with the truth; that everything you know about price action is a concept (delusions created in the minds of the masses) and that the psychology behind the analysis is far more important than what the analysis is supposed to indicate.

    • DanteA31

      I don’t think shes serious trader because if she was she would have more indicators on her chart. These loses are very avoidable if she can open her mind into complex plays.   

  • Astock460

    still far away from the entry point

  • Ilya Gruntal

    Selling dollar is a bad idea in general at the moment, please look at the bigger picture of months/weeks and dollar index before makin’ decisions, Huck…
    Best of inspiration in 2012.

  • Godup4us

    sorry bro… gudluck nxt tym

  • FatCat

    If it’s any consolation, I also went down in flames on that call. :-(