Trade Idea: 2011-11-3 2:09
I know Halloween is already over, but I hope I get a treat from the market with this sexy setup I spotted on Cable!
The pair has been making lower highs for the past couple of days, forming a falling trend line. I think that sellers still have the upper hand in the market so I plan on jumping in on the trend when the pair pulls back to the 61.8% Fibonacci retracement level. If you’ve noticed, the area around 1.5980 coincides with the trend line. Sweet, eh?
In fact, just a few days ago, Greek Prime Minister Papandreou spooked the markets when decided to hold a referendum on the EU loan package. It triggered a wide-reaching case of risk aversion that resulted in a huge Cable sell-off. I think this will continue today, especially with the G20 summit and U.S. non-farm payrolls coming up.
There are a couple of important economic reports due today but I think the main event to watch out for is the speech by BOE Governor Mervyn King. In the past, his speeches tend to have a negative effect on Cable, so I’m thinking the same will happen later.
Based on my technical and fundamental biases, I’m going to short Cable. Here’s my plan:
I’m feeling good about this trade idea. I hope it works out.