Short Signals On the GBPUSD! – Trade Closed

Trade Closed: 2010-06-20 22:30

PoD Chart

Oh, so I did jinx myself! To be honest though, I don’t feel so bad even if I got stopped out at breakeven because I believe it was the right thing to do. If I took profit too early and didn’t allow enough breathing room, I might have ended up closing the trade that could’ve made my year!

I was trading the daily charts, and if price went my way, I would’ve added to my positions and turn the initial 2:1 reward-to-risk ratio into as much as 10:1!

So what’s next for me? Should I continue shorting the pound? Or should I just shift my view and ride this retracement? Hmmm… Think Huck, think!

Trade Adjustment: 2010-06-16 22:48

I got triggered! I don’t want to jinx it but I just can’t help it… It looks like I caught a top. With price going more than 75% of my stop loss in pips already, I’m going to move my stop to breakeven (1.4850) in order to create a risk-free trade.

Cross your fingers guys! This could be the super swing lower that us bears have all been waiting for!

Trade Idea: 2010-06-15 23:51

PoD Chart

The other day, Big Pippin showed a daily chart of the GBPUSD on his chart art. He highlighted the descending trend line connecting the pair’s lower highs and, at the same time, pointed out the area of interest around the 50% retracement level. That got me thinking about a possible trade idea…

I also noticed that the stochastics are in the overbought area, probably getting ready to move back down. I placed my short entry order near the 50% Fibonacci level, with my stop 190 pips away. I set my first profit target at the week open price of 1.4580 and my second profit target at 1.4250. Quite an ambitious target, don’t you think? Then again, we never know if this pair could fall back to its yearly lows!

Of course, what use is a trade idea without fundamental backing right? So, once again, let me stand on my soap box and tell you all about why I think the pound… well, sucks!

For one, inflation in the UK is waaaaaay over the Bank of England‘s target rate. Under normal economic conditions, this would probably warrant a rate hike but these aren’t normal times! The BOE simply cannot raise rates because it runs contrary to its expansionary policy.

Remember, whenever central banks tighten monetary policy, e.g. raising interest rates, it makes it more expensive for businesses and consumers to secure loans, which could temper economic growth. With the exorbitantly high unemployment rate and high inflation, UK might end up as a prime example of an economy experiencing “stagflation” – at least, according to Forex Gump.

I’m not saying the US is doing any better. One main difference between the two though is that the dollar has this unfair advantage of being the world’s reserve currency. Once “bad” economic data starts coming out again, we could see the dollar find a lot of buying support again!

Looking at the economic calendar, there are some economic data that could take price to my entry point. If these come out better-than-expected, particularly UK’s unemployment rate and the Claimant Count Change, we just may see the pound rally enough for me to hit my sell order.

Here’s what I’m gonna do:

Short GBPUSD at 1.4850, stop loss at 1.5040, pt1 at 1.4580, pt2 at 1.4250.

Wish me luck on this one! And don’t forget to follow me on MeetPips.com!

  • calcal168

    It is a bit early to sell the GBP now. I would consider to see around 1.5 level. I believe, 1.48 level will be broken today completely and heading for 1.5 level. 1.5 should be a much better location to sell.

  • calcal168

    It is a bit early to sell the GBP now. I would consider to see around 1.5 level. I believe, 1.48 level will be broken today completely and heading for 1.5 level. 1.5 should be a much better location to sell.

  • Firstfx

    I believe this trade was triggered (i have it hitting about 1.4853 – talk about close) about 3 hours ago and now you should be up almost 150 pips. Very nice.

  • Firstfx

    I believe this trade was triggered (i have it hitting about 1.4853 – talk about close) about 3 hours ago and now you should be up almost 150 pips. Very nice.

  • mastergunner99

    I think this short is premature. Price is correcting at the moment and I don’t think it’s done correcting just yet. During this recent correction, price dipped down a bit giving some excitement to the bears. However at the Golden Ratio, bulls took the reigns again. Price moved all the way back up and broke the previous high.

    Price is looking to me to stretch all the way to 1.5050 first. Which also marks the Golden Ratio point for the much larger downtrend that was taking place since mid April.

    That same Golden Ratio for the downtrend coincides with the 161.8 extension for the smaller uptrend. As well earlier in May price retreated from that level.

    I say move your entry to where your stop is. Or at the very least, extend your stop past that 1.5050 mark.

    Happy Pippin!

  • mastergunner99

    I think this short is premature. Price is correcting at the moment and I don’t think it’s done correcting just yet. During this recent correction, price dipped down a bit giving some excitement to the bears. However at the Golden Ratio, bulls took the reigns again. Price moved all the way back up and broke the previous high.

    Price is looking to me to stretch all the way to 1.5050 first. Which also marks the Golden Ratio point for the much larger downtrend that was taking place since mid April.

    That same Golden Ratio for the downtrend coincides with the 161.8 extension for the smaller uptrend. As well earlier in May price retreated from that level.

    I say move your entry to where your stop is. Or at the very least, extend your stop past that 1.5050 mark.

    Happy Pippin!

  • LarryLivingston

    I really suprised to hear the trade did work out Huck! I saw your post just after I though I had come up with a similar analysis. Figured it was the end of that part of the correction and loaded up at 1.4823 and then at 1.4824. When things turned down right away I unloaded at 1.4800 and then put a stop at 1.4737 since it was bedtime. Next morning saw the reversal and of course was stopped out.

    Keep on pippin

  • calcal168

    The trade is not bad and it did go further down out of my expection to 4650. It is just a matter a where to move stop and take partial profit.

    However, today, it is a better sell because it is close to 1.5 level but not quite yet. If it is at 1.5 I will sell it with my eyes closed. I always find 1.5 is better location to sell than your entry.

    However, I sold Cadjpy at 90 with my eyes closed!

  • businessman78

    I was following your trade also, but I close in profit before it retrace. NOW, have you look at the divergence on the 4 hr chart? just put a stoch on the chart and you will see it, it’s obvious. It’s testing the trendline as I write this.

  • LarryLivingston

    I really suprised to hear the trade did work out Huck! I saw your post just after I though I had come up with a similar analysis. Figured it was the end of that part of the correction and loaded up at 1.4823 and then at 1.4824. When things turned down right away I unloaded at 1.4800 and then put a stop at 1.4737 since it was bedtime. Next morning saw the reversal and of course was stopped out.

    Keep on pippin

  • calcal168

    The trade is not bad and it did go further down out of my expection to 4650. It is just a matter a where to move stop and take partial profit.

    However, today, it is a better sell because it is close to 1.5 level but not quite yet. If it is at 1.5 I will sell it with my eyes closed. I always find 1.5 is better location to sell than your entry.

    However, I sold Cadjpy at 90 with my eyes closed!

  • businessman78

    I was following your trade also, but I close in profit before it retrace. NOW, have you look at the divergence on the 4 hr chart? just put a stoch on the chart and you will see it, it’s obvious. It’s testing the trendline as I write this.