Forex Trade Updates: GBP/USD Long & AUD/NZD Short

Gonna kick off the new forex trading month with a look at a potential long play on GBP/USD, as well as manage my open orders to short AUD/NZD.

Long GBP/USD

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

GBP/USD 4-Hour Forex Chart

GBP/USD 4-Hour Forex Chart

Despite the FOMC jawboning that a December rate hike still on the table, the Greenback has been feeling pressure from forex traders. This is likely due to recent global data suggesting weakening conditions, which doesn’t support a tightening move from the Fed, or any other central bankers as a matter of fact.  On the other side of the pair, we actually have a very active economic calendar for the British pound, notably on Thursday with the Bank of England monetary policy statement.  Volatility is likely to rise and take the British pound anywhere, but price action may likely continued to be contained within the recent range between 1.5200 – 1.5600.

But for now, I think the recent pressure on the U.S. dollar is likely to be the driver on the pair since its the freshest theme, which is why I’m looking at a long position in GBP/USD. If I’m gonna short Greenbacks, might as well do it against the only other currency looking to raise interest rates as well.

Technically, this pair has found strong support around 1.5200 – 1.5300 since the end of September, which is I’m looking to go long there if retested.  My stop is below that recent support area, and my target is the top of the range that has been formed.  Here’s what I’m doing:

Long half position GBP/USD at 1.5300, max stop at 1.5050, profit target at 1.5800

Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t follow what I do. Risk Disclosure.

I’m only risking 0.50% of my account on this one, and with this trade structure, I have a potential reward-to-risk ratio of about 2:1. Of course, anything can happen in the forex markets, so if the story changes I’ll be sure to reassess and adjust quickly if necessary. Stay tuned by following me on Twitter and Facebook!

Short AUD/NZD

Original Trade Idea: Forex Trade Idea: AUD/NZD Support Break & Retest?

AUD/NZD Daily Forex Chart

AUD/NZD Daily Forex Chart

There was no pullback higher in AUD/NZD recently thanks to broad sentiment that the rate cuts in New Zealand may be on hold. This propelled the Kiwi higher against the majors in recent weeks, taking away any opportunity for the market to allow me to hop in the recent downtrend at a better price.

Now with the market on its way lower and reducing the potential reward-to-risk, as well as the upcoming Reserve Bank of Australia monetary policy statement, I decided to close my open orders to short AUD/NZD at 1.0900.  No trade. 

Overall, I was once again pretty lucky with gauging the direction of the pair, but unfortunately, too careful with my entry and ultimately leave a lot of pips on the table.  I will continue to watch this pair but for now, I’m going to focus on GBP/USD above and my open orders on GBP/NZD to short. Stay tuned!