Trade Cancelled: 2011-8-31 1:30
As it turns out, the dovish remarks of once-hawkish BOE member Martin Weale sent the pound tumbling down the charts. The bulls didn’t even get a breather! I was expecting GBP/USD to pare at least some of its losses first before continuing to trade lower.
I missed out on what could’ve been a really good trade. I guess I should’ve just jumped in at market when the pair made a new low instead of waiting for a retracement back up to 1.6450. Still, I’m not too bummed out; I did get the direction corected.
Besides, today’s another day. I’ll keep my eyes peeled for ‘em sexy setups and hopefully next time, I don’t miss the move.
Trade Idea: 2011-8-25 2:43
From what I’ve read, it seems like the pound has been one of the weakest currencies against the dollar. According to Pip Diddy, it lost more than hundred pips yesterday despite the lack of any catalyst. Because I’m a firm believer of the saying, “Strike while the iron is hot,” I’m going to make the most out of the pound weakness and sell it against the dollar.
Looking at the charts we see that the pair broke below support around the week open. However, I won’t jump in just yet. Stochastic indicates that the pair is already oversold so I’ll wait for the pair to pullback around the 61.8% Fibonacci retracement level.
If reversal candlesticks materialize around the previous support area, I’ll most probably pull the trigger. I’m eying the area around 1.6550 to place my stop. As for my profit target, I’m thinking of collecting my pips around the most recent low at 1.6350.
I don’t expect upcoming important reports to have a strong effect on price action. While the U.K. and U.S. GDP reports are coming out tomorrow, both are the second releases, which means the impact will probably be muted.
Besides, the U.S. GDP is predicted to be revised to 1.1% from 1.3%, which could give traders another reason to become risk averse and sell GBP/USD.
Just in case you didn’t read my analysis, here’s the tl;dr version:
Sell GBP/USD around the 61.8% Fib, pt at 1.6350, sl at 1.6550. I will adjust my position size accordingly for a risk of 1%.
That’s my trade idea for this week folks. I hope it works out!