It looks like the rollercoaster ride in Cable continues, and fortunately (or unfortunately) for me, that bounce higher took me out of my short forex position. Here’s a quick review!
Original Trade Idea: Cable Ready to Resume Downtrend?
I zoomed down to the four hour forex chart for the review since I wasn’t in this trade for too long relative to the longer timeframe setup. Overall, we’ve seen the market shift back and forth, first on weak USD sentiment after a stretch of weak U.S. data in mid-May (e.g., weak retail sales and manufacturing/industrial data), back to U.S. bullishness on positive CPI data, and now what seems to be a return back to broad weak U.S. dollar sentiment after the big tick lower in the preliminary U.S. GDP data. U.K. data hasn’t been impressive through out, limiting the rallies in Cable.
Today, we saw more Greenback weakness, likely due to the strength of EUR/USD (on a rout in the European bond market) pulling the Greenback lower across the board. This was enough to move GBP/USD back to the upside, taking me out at my stop at 1.5370, which I trailed to to avoid the top tier volatility events.
Total: +200 pips/ +0.50% gain
Overall, I don’t mind getting taken out, especially as broad USD sentiment weakens and ahead of the Non-Farm Payrolls report tomorrow. I’ll continue to watch Cable, but this time to the long side if the dominant weak USD sentiment continues next week. Until then, stay tuned for new potential ideas and/or updates to my AUD/NZD short forex position that remains open. Good luck and good trading!