We’ve got a busy week coming up in terms of potential catalysts on the forex calendar. And with GBP/USD moving my way so far, I think it’s a good idea to lock it profits with a trail stop.
Original Trade Idea: Cable Ready to Resume Downtrend?
Since my entry a few weeks ago, it’s been a rollercoaster ride for GBP/USD as it continued to rally higher and then dropped as USD strength came roaring back in the last week. We also saw weak U.K. GDP data last week to give Sterling bears more reasons to load up on their GBP short positions, pushing my short Cable position into the green and them some.
And now we’re heading into a forex calendar this week heavy on top tier events that include various reads on PMI data points, the Bank of England’s latest monetary policy decision, and of course, the monthly U.S. jobs data update. Of course, we won’t know what the data will be until we get there, which is why I’m going to be prudent by trailing my stop to lock in some of my current 350 pip profit. I’m going to pull it in pretty tight, to within about half of the weekly average true range, to get out quickly in case the data supports a quick move to the upside. Here’s what I did:
Trailed stop from 1.5920 to 1.5370. Locked in 200 pips (a 0.53% profit) and created a risk free trade.
Will watch for now and if the fundamental picture still favors further more moves down, then I’ll consider adding to the position and trail my stop more to maximize my gain but limit my risk. Stay tuned!