Broken Resistance-Turned-Support on Cable? – Trade Review

Trade Review: 2011-04-27 23:10 ET

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PCDPOD20110427.review.png

As we can see from the today’s price action, the broken resistance area around WO, PDH, and top DATR (around 1.6530) did hold as support during the US trading session.
Buyers held the level for a couple of hours and it was all upside from there after the Fed announces no change to their QE plans as they will end it in June. Of course, with no changes to the Fed’s current plans, traders continued the USD slaughter into the end of Wednesday’s trading session.

After getting triggered to go long at 1.6530, the first half of my position was automatically closed at my first profit target just under the PWL at 1.6590. I closed my remaining position manually at 1.6525, when I called it quits for the day.

Total: +77.5 pips/ +1.29% gain

Overall, great trade, but I could have executed a little bit better. I forgot to recognized that the statement came out in the afternoon US trading session. Europe and Asia were closed and I should’ve remembered that chances were high that the Fed news would have continued to be priced into those sessions (as it is being done now).

So, I left much more profits on the table, which could have been avoided had I remembered that little nuance of trading. We live and learn right? I’ll definitely keep it in mind for the FOMC meeting.

That’s if for today. Two more sessions left this week, so I’ll keep an eye out for any new trading opportunities to extend my gains this week. Stay tuned on my Twitter and Facebook pages for new ideas!

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Trade Idea: 2011-04-27 05:20 ET

Interesting setup on Cable today as we just saw preliminary UK Q1 GDP come inline with expectations at 0.5%. This is better than the previous quarter contraction of -0.5%, pushing up Cable above yesterday’s highs (1.6533). Is this broken high now support?

PCDPOD20110427.png

In the 15m chart above, we can see the effect of the UK Q1 preliminary GDP report as it pushed up Cable over 100 pips after it’s release. This makes that cluster of broken inflection points a potential support area, so I’ll go long there if we see a retest.

I’ll set my stop to just below the DO. If triggered, I’ll cut half my position and trail my stop to breakeven if PWH is hit, and close my whole position if top WATR is hit. Here’s what I am going to do:

1st Half: +60 pips
2nd Half: +95 pips
Long GBP/USD at 1.6530, stop at 1.6470, pt1 at 1.6590, pt2 at 1.6670

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

The biggest “X factor” for today’s price action is of course the FOMC interest rate decision, and the first time ever public statement from the Fed chairman right after the decision. Traders are going to closely listen for hints on the future of quantitative easing. This could be a market mover, so depending on where my trade is at, I may close orders/open positions down early. Stay tuned on my Twitter and Facebook pages for updates!

  • pipcrawler

    Thanks @PaddyB! Yeah, it’s nice to get lucky every once in a while

  • PaddyB

    Woo Hoo! You nailed this one! Nice trade sir, nice trade.