Close Open Orders: 2010-03-01 12:15
Good afternoon forex friends! It looks like I missed out again, as the entry on my trade was just above Cable’s high point on Friday and I wasn’t triggered before the drop. With the British Pound getting crushed right off the bat in Monday’s session, I have decided to close my open orders. No trade.
According to Bloomberg, the Pound plunged against the major currencies as polls indicate “the U.K. may elect its first minority government since 1974.” This brings political uncertainty and does not clear the air on what may be done with the nation’s record deficit.
Cable dropped almost 400 pips during the European trading session to a low around 1.4790. Since, the pair has retraced higher to just under the psychological level of 1.5000. Will traders jump back on the downtrend here? Hard to tell, but it looks like political and fiscal uncertainty spells disaster for the British Pound, and if it doesn’t clear up soon, this just may be the beginning of a bigger move lower. Stay tuned!
Trade Idea: 2010-02-25 16:49
What’s up Forex addicts! Man, the British Pound has been getting pounded like it stole something lately! It looks like the pair has found a temporary bottom at 1.5200 and is currently retracing higher–how far will it go before traders potentially start dumping on Cable again?
Technically, it’s a simple Fibonacci setup on the one hour chart. I have also marked points of interest that lines up with the Fibonacci levels and may draw in sellers if retested. First, there is the broken support-turned-resistance around 1.5400, and then previous week low around 1.5350. This potential resistance area (highlighted in blue) may be a great swing point to jump back into the downtrend.
Fundamentally, the focus for Cable traders recently has been UK’s own record deficit numbers, and what may happen after the upcoming UK elections. Will the new government pull back on the easy money too early? We’ll have to wait and see. For now, the next focus is the preliminary UK GDP report at 0930 GMT, which is expected to show negative grown. Also, concerns of a potential Greece debt downgrade has got risk takers shedding high-yielding assets from their books.
The situation isn’t looking any rosier over in the US with its own debt concerns, and we will be getting an updated picture of growth tomorrow with the Q4 US GDP data coming out at 1330 GMT. My main man Forexgump thinks tomorrow’s report won’t help paint that rosy picture–check out his blog to read his thoughts on Advance US GDP. On top of that, we will see existing home sales, Chicago Purchasing Manager Index, and U. of Michigan consumer confidence data. Should be an action packed day.
So, for my trade to end the week, I think the upcoming data will bring back some volatility. If it is enough to push Cable up to the potential resistance area highlighted on the chart, I will go short there. My stop will be above the broken-support-turned resistance area, and I will target recent swing lows just above 1.5200. Here’s what I am going to do.
Short GBPUSD at 1.5350, stop at 1.5420, pt1 at 1.5280, pt2 at 1.5210
Remember never to risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly.
Stay tuned and good luck!