I’ve got a couple of opposing pound positions open so far, and I’m waiting for the top-tier U.K. events to provide more direction this week. Here’s a quick update on my trades.
In my initial trade idea, I scaled in this GBP/USD short position with one entry at 1.3000 and another at the 50% Fib or 1.3075. However, price surged past these Fib levels and almost hit my stop loss at 1.3525.
I’ve considered closing this short position late last week when price moved past the swing high, but I’ve decided to keep it open when the U.S. retail sales figures beat expectations and triggered a sharp selloff. After all, the 1.3500 resistance area lines up with a correction area on a longer-term time frame so I’m thinking pound bears could return from here.
Besides, we’ve got several top-tier reports that could provide additional bearish momentum for Cable this week. Weaker than expected results could renew pound weakness on expectations of additional BOE easing in their next policy statement, but I’ll be ready to cut my losses if the results come in very strong.
I’ve noticed a long-term downtrend on this pair a while back before deciding to hop in a short position upon seeing confirmation on the 1-hour time frame. As shown in my trade update, I sold on a break of the head and shoulders neckline at .8350 but it looks like price is still making a retest for now.
My stop is still pretty far away at .8675 so I’m not too worried about this trade. I’m hoping the ECB interest rate decision would allow the selloff to gain traction, possibly pushing the pair lower by roughly 300 pips or the same height as the chart formation. On top of that, tensions in the European region might also keep the shared currency’s gains limited.
I’ll likely close one of these positions within the week, depending on the outcome of the U.K. reports. Stay tuned to my blog updates to find out which one!
As always, 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 simply follow what I do.