Cable Ready to Swing Short? – Trade Closed

Trade Closed: 2011-07-05 05:50 ET

Good morning! There has been pretty good movement in Cable since I opened my trade yesterday, but it looks like I could only pull a very small winner on today’s volatility. Check out my step-by-step moves!

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

PCDPOD20110704.review.png

After resistance held at the PWH (1.6120) yesterday, traders took Cable lower to the major psychological area of 1.6000 during today’s Asia and morning European trading session. At that point I had almost a 2:1 return-on-risk and decided to make an adjustment because that was strong potential support area, and because of UK CIPS Services PMI data coming up.

UK CIPS Services PMI had been trending lower over the past few months, so I thought if it came in lower once again, as expected, it could boost the profitability of my trade. So, I decided to adjust my stop below my entry (announce on my Twitter and Facebook pages) and go for my ultimate target. Unfortunately, the UK data came out better than expected, and as it has in the past, Cable strongly rallied to the upside and took me out at 1.6100.

Total: +20 pips/ +0.14% gain

In retrospect, my line of thinking was good, but obviously the more profitable adjustment would have been to exit my position at 1.6000 or close down a portion of it. Since I was only in half of my usual risk, I decided it wouldn’t be a big deal either way so I just kept it on. And it wasn’t a big deal closing down for only 20 pips, but I am a little miffed that I let a max 130 pip gain turn into a 20 pip gain…doh!

So, a very tiny profit to start out the week but valuable experience gained in the process of learning to be flexible with the ever changing market. It’s only Tuesday, so I’ll definitely be on the hunt for new opportunities–or maybe even short Cable again! Haha! Stay tuned, good luck and good trading!

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Trade Idea: 2011-07-04 05:38 ET

Good morning forex friends! It’s the start of another week in these crazy markets and I already have a technical setup staring straight at me. Will divergence at the resistance area help me catch a potential top for the week on Cable?

PCDPOD20110704.png

Up above on the GBP/USD one hour chart, we can see my usual favorite setup of divergence at a potential resistance level. 1.6100 – 1.6150 has been a strong area of support until it was broken a couple of weeks ago–is it now strong resistance? Well, there is divergence on the chart and that area does line up with the 61% Fibonacci retracement level and last week’s high, so I think the chances are good for a swing lower.

I have decided to short GBP/USD at market (1.6120). My stop will be 1/4 weekly ATR and my target will be just above last week’s low of 1.5913. Finally, since this is purely a technical play, I am only risking 0.50% of my account. Here’s what I am doing:

Short GBP/USD half position at market (1.6120), stop at 1.6190, pt at 1.5930

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

We do have an action packed week on the forex calendar, most notably the BOE interest rate decision and US jobs report. I will most likely close out my position if it’s still open before those events are released.

Of course, I’ll pay close attention to the constantly shifting market environment and if I have any updates or adjustments, I’ll be sure to post it on my Twitter and Facebook account! Stay tuned!

  • Pixtured

    how will the PMI affect us today?

    • pipcrawler

      Expectations are pretty much for inline with the previous release (53.5 expected vs. 53.8) and the trend over the past three releases has been down. 

      This data point has had a mixed market reaction in the past, but overall it can be a strong market mover (+100 pip reaction potential).  Be ready!

      Of course, no one can tell what will happen during the data release, which is why I adjusted my stop to lock in profits. 

  • Maxiv

    this is going well

    • pipcrawler

      Yeah, looks like I’m getting lucky this week with Cable.  We’ve got the UK services PMI up later today, so I decided to move my stop to 1.6100 (updated on my Twitter and Facebook account) to lock in a very small profit.  Let’s see where that data takes us.  Good luck!