Buying GBP/USD on a Pullback – Close Open Orders

Close Open Orders: 2012-12-19 20:12 ET

Good evening forex friends! It looks like another case of deja vu as Cable pushed higher without a retracement. With the pair already hitting my max profit target and beyond, I’ve decided to close my open orders.

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

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The chart definitely says it all as there was no pullback after the consolidation on Monday and Tuesday. Risk taking sentiment continued to push the pair higher all the way to 1.6300, where it met resistance and sellers temporarily took over. This reaction to 1.6300 actually makes sense as it is strong resistance that saw reversals in April and in September. Given that we are nearing the week’s end, and pretty much the last full trading week of the year, I’ve decided to close my open orders to go long at 1.6170. No trade.

A part of me thought about going long on this pull back, but we do have UK retail sales coming up later in the session. It is forecasted to be higher than the previous month, but all throughout this year, that data point hasn’t been consistent on beating or missing expectations, so I won’t take the chance to put orders in front of it.

So, I guess that’s it for me for 2012. I was hoping to end the year strong, but I just couldn’t get in rhythm with what the market was giving me in Q4. Mistakes were definitely made and I know I could have done a lot better, so I’ll reflect on that and do a final review very soon.

Thanks for checking out my blog everyone; I really appreciate it and the comments I get, whether positive or negative, from all of you. Have a safe and happy holidays, and I hope to see you all again very soon!

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Trade Idea: 2012-12-17 17:24 ET

Good afternoon forex friends! For probably my last trade idea of 2012, I’m checking out the rising trend higher on Cable! With quite a few top tier economic events this week, we could see volatility–and an opportunity–to hop on the trend!

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I have the 60m chart above of GBP/USD, and we can clearly see the trend higher sparked by many factors: improving global economic data, more quantitative easing from central banks, and an apparent stabilization with the eurozone debt crisis. For these reasons, I like a short-term bullish play on GBP/USD. And looking at the forex calendar, we’ve got plenty of UK data with positive forecasts, which could help the Pound move higher this week. We’re light on US data this week, but unless we see a huge surprise with housing data, Durable Goods, or the Philly Manufacturing index, they may not be big catalysts for USD pairs.

So, I look to go long on a pull back to the broken resistance area–is it now support? Well, we’ll see, but I look to go long there, with my stop below the major psychological level of of 1.6100 and an ambitious max profit target around the next minor psychological level. Here’s what I am going to do:

Long GBP/USD at 1.6165, stop at 1.6085, max profit target at 1.6250

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

This trade structure gives me a potential reward-to-risk ratio slightly above 1:1. Since it’s the last full trading week of the year, I’m not expecting anything too crazy, although we do have a deal on the US fiscal cliff looming in the shadows. If we see that event, or any other surprise events, I’ll be sure to adjust and adapt quickly. Stay in tune by following me on Twitter and Facebook.

Let’s see if I can close 2012 out on a positive note, and thanks everyone for following my blog. Good luck and good trading!

  • Rasif Shafique

    Wow… I’ve put this pending order yesterday…