Long Cable Day Trade – Closed

Trade Closed: 2013-09-20 10:40 ET

It looks like the USD selloff thanks to the Non-Taper event was very short-lived as it seems USD found a bid during the Thursday and Friday trading sessions.

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

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The follow through I was looking for after the Fed held their bond purchasing program as-is didn’t materialize in the Thursday and Friday trading sessions. This could have been spurred by weak UK data (retail sales) and positive US data in Thursday’s session (e.g., Initial Claims & Philly Fed). We got positive public sector net borrowing from the UK in the Friday session, but comments from St. Louis Fed chief James Bullard was probably an unexpected boost to the Greenback as he puts the possibility of an October Taper on the table.

Whatever the ultimate driver or combination of drivers may be, the Greenback gave the rest of the majors a run for their money to close out the week. GBP/USD fell lower and didn’t look back much as the broad Dollar strength took over. My trade was closed out in the morning US trading session for a very small loss at 1.6010.

Total: -64 pips/ -0.33% loss

So, another small loss for the week. The Guppy trade with a manual close ahead of the Taper event (which turned out to be a winning idea) and this Cable long trade that couldn’t find traders to follow through the momentum higher. Talk about terrible luck, but I’m not going to let it keep me down. I kept my risk very, very small and I’m walking away confident they were both good trades that just didn’t go my way this time.

Time to regroup and get some weekend rest, then hit the charts on Sunday. Thanks for checking out my blog. Good luck and good trading!

Trade Idea: 2013-09-19 6:22 ET

Good morning forex friends! Thanks to the “No Taper” event, USD bears are out in force and ready to sell more every chance they get. The dip we’re seeing in Cable at the moment looks like a new opportunity to get in the trend.

With the Fed holding the bond purchasing program as-is, as well as revising its GDP estimates down for this year and next, it looks like traders put back their risk-on trades with the quickness in the Wednesday afternoon US session and Thursday morning Asia and European sessions. This sentiment could follow through for the rest of the Thursday session which is why I’m taking a bearish USD position for a day trade.

This morning in London, we did get weak UK retail sales data (-0.9% vs. 0.4% forecast) to give me the pull back I was looking for to jump in the trend. With the pair hitting the 50% retracement area and stochastic indicating over sold conditions on the 15 minute timeframe, I decided to go long at market. My stop is just below the 61% Fibonacci”>Fibonacci retracement level, and my target around the high for this week after the Fed event. Here’s what I am doing:

Long a third position GBP/USD at market (1.6074), stop at 1.6010, profit target at 1.6160

Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Risk Disclosure.

I’m only risking 0.33% of my account on this one, and with this trade structure, I have a potential reward-to-risk ratio of about 1.34:1. Of course, anything can happen in the forex markets, especially with a few US economic releases on the calendar today (most notable are initial claims and existing home sales), 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!!