Pick of the Day: GBP/USD – Trade Closed

Update 12/28/2006 – 10:42 am EST

With such strong positive US data today, I have decided to close the trade since the reports came out against my short dollar bias and the pair will probably continue to linger around 1.9600 price area for the rest of the day. The current market rate is approximately 1.9595 -You may close yours out at your descretion. This will be the last trade of the week as there are no significant reports lined up tomorrow….

Too bad we couldn’t finish the year out strong, but I am very hopefull for 2007, especially with the new format of BabyPips.com. We can all trade, learn, and be prosperous together with our new community. This will be the last trade of the year, and I will return locked, cocked and ready to rock in 2007 when the market gets back to full swing on Jan 2, 2007!! I hope everyone around the world has a safe and wonderful weekend!

Update 12/28/2006 – 10:20 am EST

We got some killer numbers today out of the US as the Chicago PMI came out at 52.4 vs 49.9 in November, Consumer confidence index at 109.0 vs. 105.3 in November, and Existing Home Sales are up +0.6% to 6.28M. What a surprise!!! Of course, the dollar rallied on these reports and our long trade was triggered and almost reached our stop out level, but quickly reversed at 1.9575. Stay tuned for more updates!

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It looks like traders priced in weaker US numbers last night as the dollar fell against the GBP and the EUR from the start of the European trading session. We still have the Chicago PMI, Existing Home Sales, and Consumer Confidence to be released at 10:00 am EST. With all three reports being released at the same time, we may see some whipsaw action before the market digests the information and a clear direction may be formed.

With it still being the holidays, and that we have multiple reports being relased, I’m looking for a range bound play. If we do see weaker numbers across the board, I will be short biased on the dollar as the market may see weak numbers as a cause to push the Fed to cut rates sooner than later.

Long 1 lot GBP/USD at 1.9610, stop at 1.9570, pt1 at 1.9650, pt2 at 1.9690

If we do see weaker numbers from the get go, the pair may spike up and I see the 1.9700 area as a resistance area in which to play a reversal in the extended dollar sell off.

Short 1 lot GBP/USD at 1.9710, stop at 1.9745, pt1 at 1.9680, pt2 at 1.9650

So, we will keep a an eye out for the US economic reports at 10:00 am EST. Stay tuned for any updates. Good luck and good trading!