A New Fibonacci Short Setup on Cable? – Trade Closed

Trade Closed: 2011-09-27 9:15 ET

Good morning! It looks like a plan from European leaders to contain the debt markets has squashed the massive fear moves, propelling traders to move out of their Dollar and Yen positions. As you may have guess, this was no good for my GBP/USD short…check it!

Before you move on, for those who are not familiar with my framework, signals, setups, or acronyms, please visit my discretionary trading framework blog.

PCDPOD20110926.review.png

As I mentioned in my original post, this is a highly fluid market. And it looks like the story that European leaders may be stepping up their game was enough to switch trader mindsets and get out of “safe haven” bets like US assets and the Japanese Yen. Again, the plan is not concrete, but doesn’t anything have to make sense now a days to move the markets? :)

Needless to say, the potential resistance area didn’t hold for long as sentiment has once again shifted on a dime. My short position was stopped out at 1.5595.

Total: -75 pips/ -1.0% loss

In retrospect, there is one thing I think I could’ve done better. Instead of going in at market, I should have waited to enter at the 50% or 61% Fib levels. I think the fear of missing trades in the past by being too conservative on my entry got me in this trade too early. The trade would still have ended in a loss (losing trades are a part of the business) but the trade would have been better executed in my opinion. And maybe I could have gotten out earlier for a smaller loss.

So, not the greatest start to the week, but I’ve got plenty of time to make it back. As always, stay tuned to my Twitter and Facebook pages for possible setups on the fly. Good luck and good trading!

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Trade Idea: 2011-09-26 10:00 ET

Good morning traders and welcome to a new week in trading! Europe rallied almost right out of the gates and the US session looks like it’s putting risk back on–so what has changed? Not much yet, and until we see concrete plans to turn the global economy around, I think this may be another good setup to buy Greenbacks.

PCDPOD20110926.png

For my first trade idea of the week, I’ve got a technical swing setup on Cable. On the one hour chart above we can see a very familiar setup: divergence at a potentially strong resistance area of Fibs and major psychological levels (1.5500 – 1.5550). It looks like 1.5550 already held as the top, and with stochastic already forming its top and turning lower, I’ve decided to go in at market.

My stop will be a quarter of that weekly ATR and my target will be twice that, putting me just above last week’s low. Here’s what I am doing:

Shorted GBP/USD at market (1.5520), stop at 1.5595, pt at 1.5375

Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly.

On the forex calendar this week, we do have a couple of potentially strong economic events, but the market drivers will continue to be the European debt issues, the European banking sector, and the strength of the global economy. Of course, flexibility is still key in this fluid market environment, so stay tuned for adjustments on my Twitter and Facebook pages…Good luck and good trading!

  • Jānis Pusplatais

    my greed drowned me :D
    anyway – good setup, thanks.!

  • nb

    re: exit strategy, close a bit if in profit, then let part trail is always best

    • pipcrawler

      My trade spent very little time in the positive territory, but I’ll remember that tip going down the road.  Thanks nb!

  • Driftking1019

    I have a question, what settings are you your Stochastics set to?

    • pipcrawler

      It’s a full stochastic with 14,3,3 setting.  I hope this helps!

  • Pipmaestro

    why do you look for huge pips gain.surely put more risk on for 50 pip gain.

    • pipcrawler

      I plan for max reward, but that doesn’t mean I can’t get out of a trade
      early for small profit.  In this market gotta be flexible, for both
      worst case and if the market totally goes your way…